Powering Payments for Everyone

Network International Holdings Plc

Powering payments Annual Report and Accounts 2020 for everyone

Network International Holdings Plc Annual Report and Accounts 2020 Our purpose is to enable and lead the transition from cash to digital payments across the Middle East and Africa.

We are Network International, the leading payment solutions provider in the Middle East and Africa.

Strategic report Financial statements Our Industry 2 Independent Auditor’s Report 159 At a Glance 4 Consolidated Statement COVID-19 Response 6 of Financial Position 167 Chairman’s Statement 8 Consolidated Statement Our Business Model 10 of Profit or Loss 168 Our Markets 12 Consolidated Statement of Other Comprehensive Income 169 Chief Executive Officer’s Review 14 Consolidated Statement Our Strategic Framework 18 of Changes in Equity 170 Key Performance Indicators 26 Consolidated Statement Stakeholder Engagement 28 of Cash Flows 172 Operating Review 30 Notes to the Consolidated Business Review 38 Financial Statements 174 Chief Financial Officer’s Review 42 Statement of Financial Position 219 Responsible Business 56 Statement of Changes in Equity 220 Non-Financial Information Statement 71 Notes to the Financial Statements 221 Principal Risks and Uncertainties 72 Contact Information 226 Directors’ Duties 88

Corporate governance Corporate Governance Report 90 Board of Directors 94 Executive Management Team 97 Corporate structure 114 Audit and Risk Committee Report 115 Nomination Committee Report 128 Directors’ Remuneration Report 132 Directors’ Report 149 Viability Statement 155 Going Concern Statement 158

Visit investors.networkinternational.ae to read our Annual Report Strategic report Corporate governance Financial statements 1

Who We Work For

The people we serve are at the heart of everything we do. That is why we have built a business based on long-term partnerships; serving over 80,000 merchants, and enabling over 200 financial institutions to deliver payment services to 16 million card holding consumers.

Building Enabling Supporting long-standing a smooth transition our talented customer partnerships to e-commerce workforce

Find out more Find out more Find out more P20 P23 P24 2

Our Industry

The digital consumer payments industry is built around services that allow businesses to provide digital payment options to consumers.

Who is involved in the payments chain?

Merchant Direct Merchant Acquirer Acquirer Processor Person or company selling The institution that Acts on behalf of the merchant products or services, either maintains the merchant’s acquirer, providing the technology offline or online. account, enabling the and operations to authorise merchant to accept digital transactions, route them to the payments and taking on appropriate payment scheme and the risk of the transaction. receive settlement information.

Payment Scheme Issuer Processor Issuer Includes card payment Acts on behalf of the issuer The institution that provides schemes such as Mastercard, and the payment schemes, payment methods or services to Visa, American Express and authorising transactions and the consumer and is responsible Diners Club, alongside other ensuring the transfer of funds for debiting funds from the digital payment schemes. from the consumer’s bank consumer’s account. The schemes connect the account to the issuer. acquirer to the issuer, routing transaction information, authorisation and settlement.

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How our industry works

Consumer Merchant

Issuer Issuer Processor*

Acquirer Processor*

Payment Merchant Schemes Acquirer*

Key Flow of funds Processes * Where Network International provides services

The Consumer initiates the The Payment Scheme receives the The Payment Scheme forwards transaction with the Merchant. request for payment authorisation and authentication to the Merchant routes the transaction to the Issuer. Acquirer (or Acquirer Processor).

The Merchant’s acceptance products (point-of-sale terminal or online The Issuer (or Issuer Processor) The Merchant Acquirer (or Acquirer gateway) transmit card details and assesses fraud risk for the transaction, Processor) sends authorisation to the transaction information to the verifies sufficient funds or credit is Merchant, approving the transaction. Merchant Acquirer. available and sends authorisation to the Payment Scheme. The Merchant Acquirer sends The Merchant Acquirer (or Acquirer funds to the Merchant’s account, Processor) identifies the Payment and receives funds from the Scheme and transfers transaction Issuer via the Payment Scheme. details to that Payment Scheme.

Learn more about merchant settlement in the Operating Review See page 32

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At a Glance

Understanding our business

Our purpose is to enable and lead the transition from cash to digital payments across the Middle East and Africa (‘MEA’), the fastest growing payments markets in the world.

We have two business lines

Merchant Solutions Issuer Solutions

› Direct acquiring services › Issuer processing services Enabling merchants to accept digital payments. Hosting and processing credit, debit and prepaid cards for our customers. › Acquirer processing services For our bank customers, on behalf of their merchants. › Fraud solutions Inbuilt and managed fraud operations. › Payment acceptance solutions Proprietary omnichannel solutions and products. › Loyalty solutions Card loyalty schemes and management. › Loyalty solutions Merchant loyalty programmes and management. › Value Added Services Including instant card issuance, card control › Value Added Services services and customer data analytics. Including customer data analytics, dynamic currency conversion and payment plans.

Merchant Solutions revenue Issuer Solutions revenue USD 109.4m USD 165.0m

We provide services for We provide services for 80k+ 15 yrs+ 200+ 15 yrs+ merchants average customer tenure4 financial institutions average customer tenure4

USD 33.5bn 758m 16m Total Processed Transactions Number of Volume3 processed3 cards hosted3

1 This is an alternative performance measure (‘APM’). See note 4 of the consolidated financial statements for APM definitions and the reconciliations of reported figures to APMs. 2 Share count impacted by issuance of 50m additional shares for DPO acquisition. 3 This is a KPI. For definition please refer to page 55. 4 Refers to average tenure of relationship with top 10 customers. 5 Does not include the 2% of revenues which are not allocated to a geographical operating segment.

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Financial highlights 2020

Revenue Profit from continuing operations Read more See page 42 USD 284.8m USD 5.6m (15.1)% (90.2)% Underlying EBITDA1 Underlying EPS1,2 USD 112.6m USD 6.7cents (33.2)% (62.1)%

We operate across the MEA, providing services to customers in more than 50 countries

Middle East Key addressable markets 70%5 include the United Arab of revenue Emirates (‘UAE’), Jordan and Saudi Arabia.

Africa Key addressable markets 5 include Egypt, Nigeria and 28% South Africa. of revenue

The case for investment

We are the only pan-regional provider of digital payment solutions, with scale and presence across the entire acquiring and issuing payments chain.

Strong long-term growth Quality infrastructure Robust financial track supported by clear secular trends and assets, managed by record that creates and a growth strategy that has a world-class team. shareholder value potential further accelerators. Our diversified and resilient through sustainable omnichannel payments earnings growth. platforms are scaled, well- invested and integrated.

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COVID-19 Response

Our key priorities for a changing world

When COVID-19 started to impact our business, we developed a Coronavirus Management Strategy and subsequently implemented a series of control measures and actions across the Group.”

Nandan Mer Chief Executive Officer

Working for 1 our customers

Our payments and processing capabilities continued uninterrupted and have not been affected by the pandemic. Supporting customers remained a business priority. In Merchant Solutions, we provided fee reductions for a number of SME merchants and assistance in transitioning their businesses online. In Issuer Solutions, we assisted bank customers and their cardholders by enabling payment holidays, or extending expiries on cards where suppliers could not guarantee a replacement.

Chief Executive Officer’s Review See page 14

Balancing short-term disruption “ COVID-19 has begun 2 with long-term focus to reshape the way we work, shop, From February, COVID-19 Whilst COVID-19 has been and the related lockdowns impactful, the business is gather and interact impacted consumer spending well positioned to navigate together. Including and tourism across our through, both from an regions, and the Merchant operational and balance our attitudes to Solutions business saw a sheet perspective. At the digital payments and significant reduction in same time, we continued accelerating the move Total Processed Volume to be focused on pursuing (‘TPV’). Issuer Solutions was the growth opportunities away from cash.” more resilient, with some presented by our markets. contractual fixed billings Emerging data indicates an Ron Kalifa OBE or minimums that cushioned acceleration in the transition Chairman lower transaction volumes. from cash to digital payments, In the second half of the which underpins our year, we saw improved KPIs confidence in the long-term Chief Executive throughout the business, as industry fundamentals. Officer’s Review consumer spending patterns See page 14 began to normalise.

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Maintaining a robust 3 financial position

As a result of the financial During the year we impact on our business, successfully refinanced we took a number of prudent our syndicated lending actions to reduce operational facility and ended the period expenses and capital with a strong balance sheet spending across the business. position and leverage of The Board and Executive 2.3x1,2, comfortably within Management Team have also the lending covenants of 3.5x. foregone elements of their compensation. 2.3x Chief Financial Leverage Officer’s Review (net debt: underlying See page 42 EBITDA)1,2

Looking after 4 our people

We made an early and phased implementation of working from home 89% across all of our office locations, starting Employee in early March, with a seamless transition satisfaction with in working practices. We ensured our our response colleagues were provided with virtual to COVID-19 medical services and engaged the services of a leading well-being consultancy to provide emotional and mental health support. Whilst the majority of our colleagues continue to work from home, we have implemented a phased and fluid return to our offices, Responsible dependent upon government guidance Business in our markets. See page 56

“ As consumer Pulling together through purchasing behaviour 5 strength of leadership shifts online, Network We have strong governance We ensured our Executive plays a critical role, and are led by Executive Management Team stayed being the region’s Management and a Board in touch with colleagues of Directors with extensive and the leadership team largest enabler of experience across payments, has given virtual monthly digital commerce.” international finance and updates on our business and developed market regulation. response to the pandemic. Nandan Mer We established a COVID-19 We also helped colleagues Chief Executive Officer Assessment Team to monitor stay connected through and actively respond to the our ‘Talk-to-HR’ virtual evolving pandemic, which forum and ‘NetworkFlix’ oversees our response to social platform. colleagues, business operations, supply chain, Read our onlineRead our online strategic cyber security infrastructure Principal Risks and financial stability. strategic casecase study study and Uncertainties See page 22See page [x] See page 72

Chairman’s Statement

Building our business to capture long-term growth

Following an unprecedented year, We also sought to address concerns I am pleased to report that Network through virtual forums, delivered by International finished 2020 in a Board members and management. strong position. We have maintained This approach resonated. Based new business momentum, seen on an independent internal survey strong demand for online payment examining our response to the acceptance, expanded our pandemic, overall satisfaction capabilities through the launch amongst employees was 89%. of a digital product platform in partnership with Mastercard, and This helped to ensure that we continue to work towards our payments and processing completing the acquisition of DPO. activities remained uninterrupted In withstanding the challenges of for customers and allowed us to the year we have proved that our provide other forms of support, business model is resilient and we including fee reductions and cash can look ahead with confidence. support for smaller merchants, I believe Network International is online products which allowed uniquely positioned to benefit from merchants to keep trading, and the acceleration towards digital the execution of projects for transactions and the substantial larger bank customers to deliver growth opportunities in our markets. new or adapted services to their Our business is cardholders. successfully navigating Responding to COVID-19; pulling together through strength COVID-19 had a significant short- through the challenges of leadership term financial impact on our business; presented by the 2020 was a uniquely challenging year, where lockdown restrictions, reduced pandemic, and we have with everyone across our business – international travel and dampened continued to prioritise and indeed the world – impacted by consumer spending all led to a the pandemic. Considering this, the decline in digital transactions. As strategic focus and Board focused its efforts on our a result, our revenues declined by investment into areas that customers, colleagues, shareholders (15.1)% during the year and underlying will ensure we capitalise and stakeholders. We established a net income1 declined by (60.7)%. on the significant COVID-19 Assessment Team early We were pleased to see digital in the crisis to oversee our response transaction volumes across our opportunities in our across areas such as employee markets beginning to recover during fast growing markets.” engagement, operations, supply chain, the latter part of the year and we cyber security and financial stability. exited 2020 with good momentum. Ron Kalifa OBE Chairman We implemented a range of In order to mitigate the short-term measures to keep our colleagues financial impact we took prudent safe and engaged. The transition to actions to reduce operational remote working was seamless due expenses and capital spending. to the existing flexible working policy At the same time we sought to in place, while our systems and maintain investment in future growth technology infrastructure remained opportunities. This ensured we exited robust. Our leadership team the year with ample liquidity and a kept colleagues informed through strong balance sheet, with significant regular dialogues and updates. headroom to our covenants.

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Enhancing Board composition substantial improvement in our and expertise Employee Engagement Survey, with Network’s Board consists of an a score of 73% (up from 65% in 2019). experienced, diverse and majority independent group of Directors, Our responsible business philosophy with expertise across payments, has seen enhancement, where our aim international finance and developed is to integrate environmental, social market regulation. There remained and governance (‘ESG’) practices into strong attendance at virtual meetings our day-to-day business activities, throughout the pandemic, as well strategic planning and performance as invaluable experience and insight evaluation processes. We are currently provided to Network’s Executive developing a new three-year ESG Management Team. strategy, which will be shared in 2021. Welcoming our new Chief Executive Officer As our business has evolved, we have Looking ahead and building our It is with great pleasure that we added more bespoke capabilities and business for long-term growth have recently welcomed Nandan independence with the appointment Our overall strategic approach Mer as Chief Executive Officer. of a further four Independent Non- and investment priorities remain Executive Directors (two in January consistent, with a focus on the Simon Haslam is retiring from 2020 and two in January 2021). We significant growth opportunities on Network, after a long and also appointed Rohit Malhotra, our offer in our markets. The past year successful career in financial long-serving CFO, to the Board in has seen an acceleration in the services. Following a rigorous June last year and of course welcome transition from cash to digital global leadership search, the Nandan Mer, who joined as our new payments, underpinning our Board approved the appointment CEO in February this year. confidence in long-term industry of Nandan Mer, who has an fundamentals. This acceleration extensive and proven track The Board places considerable includes an increased demand for record of building businesses importance on engagement with online payment acceptance, where in a number of global markets and feedback from shareholders. we will continue to leverage our with leading financial institutions. The Executive Management Team products and support merchants Nandan spent the most recent has an ongoing dialogue and series moving their businesses online. 11 years of his career with of meetings – many of which were Mastercard, including as Strategy virtual this year – with institutional Given our conviction around the Head for International Markets investors and analysts that are potential growth opportunities for and President of the Japanese engaged by Network’s Investor the business, the Board has decided business. This experience makes Relations function. I met with our not to declare an ordinary dividend him an excellent appointment to largest shareholders to discuss in respect of the 2020 financial year. lead us through the next phase matters of Corporate Governance This decision has been taken after of our ambitious growth plans. and broader strategic topics, while careful consideration and in order to the Chair of the Remuneration ensure capital allocation is prioritised As Chairman, I would like to Committee, Victoria Hull, also towards such opportunities that will thank Simon for his invaluable consulted investors regarding the drive growth, generate attractive contribution as CEO and wish Remuneration Policy implementation. returns for shareholders and also him well in his retirement. He maintain financial flexibility. leaves behind a strong business Supporting our people and legacy of success. and communities We will continue working towards Our people are at the heart of our completing the acquisition of Nomination Committee Report business and are instrumental in the DPO Group. DPO will improve our See page 128 delivery of our strategy. During 2020, capabilities in the African payments we reviewed and enhanced our space through technology, market engagement approach to ensure access and high growth segments. we continue to meet the employee With such a strong outlook, we expect To conclude I would like to extend engagement provisions of the UK the acquisition to deliver a double- my thanks to our employees for their Corporate Governance Code. This digit return within three to four years, delivery, to our shareholders for included a Board-level review of and significantly higher thereafter. their ongoing support, and to our our activities and the alignment of customers for their belief and trust in our Engagement Framework. Our Our entry to Saudi Arabia will be our ability to do what they ask of us. Group-wide employee turnover rate another important growth driver and has fallen over the past three years; we remain committed to expanding Ron Kalifa OBE from 10% in 2018, to 4% in 2020. our presence in that market during Chairman Furthermore, we have seen a 2021 when border restrictions ease. 7 March 2021

Our Business Model

A pan regional diversified payments business

Operating at scale across both Merchant and Issuer Solutions

Multiple product and Powered by partnerships Underpinned by service capabilities With key global payments strong governance Across point-of-sale, platforms, such as Led by Executive e-commerce, physical and our strategic partnership Management and a Board of virtual cards, mobile wallets with Mastercard Directors with substantial and value added services experience across payments, international finance and developed market regulation

Payment Issuer Acceptance Processing

Direct Our Acquiring Merchant Issuer Solutions payment Solutions solutions

Acquirer Value Added Processing Services

USD 33.5bn 16m 758m Total Processed Volume (‘TPV’)2 cards hosted2 transactions2

Revenue streams Revenue streams Net Merchant Service Charge Fee per card Transaction fees on FX, chargeback Fee per transaction Sale and rental of POS terminals Value Added Services Value Added Services

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End-to-end capabilities and presence Operating Review across the payments value chain anchor See page 30 our competitive position.

Value inputs Value outputs

Unmatched regional resources Generating long-term value and relationships

Pan regional presence across the Middle East and Africa >50 countries where we provide services

Newly invested Customers Employees technology platforms Helping to grow their Striving to make businesses in a secure, Network International 99.9% cost effective way. a great place to work. system availability >80k 73% merchants engagement score Long-standing customer relationships >200 15 financial institutions years’ average customer tenure3

Talented, highly skilled employees 6 years’ average tenure

Experienced management team Communities Investors Working to drive financial Through strategic 20 inclusion, supporting success and years’ of industry experience the communities in which financial growth. on average we operate. 15% 6.7 cents digital payments share Underlying EPS1 of transactions in MEA 1.2 cents Reported EPS

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Our Markets

Well positioned in an underpenetrated market

We benefit from a clear leadership position in digital payments across the MEA, spanning the payments value chain.

Key drivers of digital payments in MEA Cash to digital payments conversion

Fostering consumer comfort with digital payments MEA is the most underpenetrated digital payments market globally › Perception of digital Our approach payments as seamless and Facilitating an improved 2017-2019 digital payments share effortless for the consumer experience; through providing of transactions by volume1 › Overcoming consumer solutions that allow our % 4 concerns, particularly in customers to bring digital % 1 5 relation to security and fraud payments to more consumers. 5 37 %

Developing acceptance (merchants’ ability 33 % to accept digital payments) 22 % › Proliferation of acceptance Our approach 21 % 19 % 16 % % 16 % 15 %

devices and technologies Development and distribution 14 % 14 % 4 % 13 % % 2

across channels (offline, of our N-Genius™ proprietary 8 online, mobile) point-of-sale (‘POS’) devices Europe South Egypt Middle UAE Saudi Africa Nigeria Africa East Arabia › In particular, low cost and online gateway. 2017 2019 devices and acceptance using smartphones, which Investment and development 1 is particularly applicable of low cost acceptance 2017–2019 average cards per adult to small/micro merchants technologies, including QR code

and text message enabled 2.06 1.98 1.92 smartphone acceptance. 1.89 1.42 1.36 1.32 Developing issuance (of digital payment media 1.24 by banks and financial institutions) 0.32 0.32 0.31 0.24

› For payment cards: growth in Our approach 0.65 0.55 0.52

the banked population, which Assisting issuer bank customers 0.43 Europe South Egypt Middle UAE Saudi Africa Nigeria is still under developed across with more efficient customer Africa East Arabia some of our markets. e.g. onboarding, and support for 2017 2019 60% of African adults are not easy to use payments solutions part of the banking system1 such as digital wallets, P2P › For mobile devices: growth payments and virtual cards. Forecast payment card transaction volume in smartphones and growth on point-of-sale devices; 2019-2025E1 comfort with mobiles as a means of storing money 29%

Supporting infrastructure

› Broadband connections Our approach 15% › Smartphone penetration Evolve customer products and 10% › Delivery / fulfilment solutions that respond to 9% 7% 6% 6% 6%

infrastructure for e-commerce technology trends and changing 5% end consumer demands. Nigeria Africa MEA Egypt Europe South Middle Saudi UAE Africa East Arabia

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Accelerating with growth in e-commerce COVID-19

Growth is expected to be particularly strong Accelerating market dynamics in online and alternative payments methods Point-of-sale terminals E-commerce penetration of retail1 › Acceleration in year-on-year (y/y) growth rates in POS terminals in key markets in 2020, e.g. 64% in Saudi Arabia (25% in 2019) and 50% in Nigeria (39% in 2019)2 14.0%

E-commerce › Material increase in projected growth rates for

7.6% e-commerce transactions in the UAE. Forecast

6.4% CAGR for period 2019-23E was 9.8% pre COVID-19, and has been revised up to 25.2%3 4.1% 1.1% › Licences for online freelancers and businesses 4 North Europe Middle MEA Africa in Dubai increased 132% in 2020 America East › E-commerce transactions using Saudi Arabia’s domestic scheme Mada increased c.280% y/y in value and c.350% in volume during 20205 Proportion of population with internet access1

Mobile money › 48.8% y/y increase in the value of transactions during North America 88% July to December 2020, for mobile money operator Europe 83% M-Pesa, which operates in seven African countries Middle East 66% MEA 37% Africa 31% Contactless payments › Multiple countries across the MEA have raised the limit for contactless payments, increasing its adoption. e.g. limit increased by: 67% in UAE; 100% in Egypt; 100% in Saudi Arabia Smartphone penetration rates1

Middle East 84% North America 84% Europe 71% MEA 58% 1 Source: Edgar, Dunn & Co. 2019 data used due to timelag of several Africa 51% months post calendar year end in production of data for Network regions. 2 Source: Saudi Central Bank; Nigeria Inter-Bank Settlement System plc. 3 Source: GlobalData. 4 Source: Dubai Economy. 5 Source: Saudi Central Bank.

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Chief Executive Officer’s Review

Exciting future growth opportunities

Market transition to digital payments › Mobile money transactions also COVID-19 is further accelerating growing strongly: The Central market growth Bank of Kenya enabled measures We are seeing a number of trends to facilitate increased use of mobile and developments through the money transactions, instead of pandemic that indicate fast changing cash, through the pandemic. The Government and consumer monthly value of mobile money sentiment towards cash. Whilst some payments grew by 44.5% from of these trends may temper as the March to November 2020. pandemic recedes, we believe it is Delivery of strategic and likely there has been a structural business initiatives acceleration towards digital Our strategy is to provide solutions payments across our markets. that allow our customers to bring digital payments to more consumers › ATM usage declining in the UAE: across our regions, leveraging our Analysing the cards hosted by scale and competitive advantages. Network International in the UAE in January 2020, a cohort of Progress across the core business consumers who used their cards Whilst COVID-19 had a significant almost exclusively at ATMs to impact on transactions and volumes withdraw cash are now only using during the year, we saw a steady their card at the ATM for less than I have been deeply recovery in trading through the half (47%) of their transactions impressed by the second half and exited the year with in December 2020, with the positive momentum across both breadth of experience remainder taking place at a business lines. In our core market of in our team, the strength POS terminal or online. the UAE, domestic direct acquiring of our long-standing › Deployment of POS terminals fully recovered to prior year levels as relationships with accelerating in some markets: The we reached December 2020, whilst customers and the number of POS terminals in Nigeria international volumes (which largely exciting outlook for has increased by 50%, and by represent overseas visitors) also c64% in Saudi Arabia during 2020. benefited from a pickup in tourism our business. Network over the holiday period. Data from › Accelerating e-commerce has the scale and STR Global showed hotel occupancy growth through the pandemic: for Dubai returning to almost 70% capabilities to capture A Mastercard study published in through December. Naturally, November 2020 has revealed that the significant growth the pace of new business slowed nearly three out of four consumers opportunities that through the pandemic as banks in the Middle East and Africa are focused more on the immediate are available across shopping more online than they operational challenges caused by our markets.” did before the pandemic. COVID-19. But our relationships with Nandan Mer existing customers and the pipeline Chief Executive Officer of opportunities remains strong and we are already seeing a pickup in new business wins during 2021, such as the recent signings of Kuda Digital Bank and Carbon Bank in Nigeria, Bank Windhoek in Namibia and Bank Gabarone in Botswana.

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Our response to COVID-19

Our business purpose and strategy, to enable the transition from cash to digital payments across our regions, has remained consistent throughout the pandemic. However, in the short term COVID-19 has had a substantial impact on our financial performance over the course of 2020. As a result we developed a Coronavirus Management Strategy to oversee our response for our colleagues, business operations, supply chain, cyber security infrastructure and financial stability. This strategy has served us well and we have seen customer and colleague support for the actions we have taken.

COVID-19 Response See page 6

Middle East Growth in online payments: Our Africa New customer wins: In Merchant N-Genius™ roll-out continues apace New customers: Payment processing Solutions this includes a number and we finished the year with c.1,900 outsourcing wins included: Issuer and of new POS direct acquiring merchants using our proprietary Merchant Solutions for Access Bank merchant customers such as online gateway, an increase of c.1,600 Kenya, Merchant Solutions for CCA Alexander McQueen, Adidas and during the year and with record Cameroon Bank, and Issuer Solutions Western Union. We won the volumes processed through our services for Globus Bank in Nigeria e-commerce direct acquiring platform during December. This is and Republic Bank in Ghana. business for NowNow (noon.com’s reflected in our TPV growth from on-demand delivery app, part of e-commerce merchants (excluding Expanded contracts: We have the digital ecosystem of products Government and airline online TPV) supported eight of our banking and services from the Noon Group), which grew at 53% during the year customers with the issuance and major supermarket Spinneys and (versus 16% y/y growth in 2019). processing of expanded card Majid Al Futtaim Management portfolios, including well-known Services. We have also signed Cross-sell of products and value institutions such as Fidelity Bank, partnership arrangements with added services: We saw good Access Bank and RCS Group. several global brands, including demand from merchants for our We have further expanded our HyperPay, in the online acquiring Easy Payment Plan, which allows relationship with GTBank into a space. In Issuer Solutions we won consumers to set up a monthly ninth country by supporting their a competitive tender to provide repayment plan for goods or services subsidiary in Côte d’Ivoire, and exclusive services across five purchased through a POS terminal. Woolworths Financial Services countries for CareemPAY and a (The Easy Payment Plan is a service in South Africa has renewed our mandate to support the issuance we enable, where the lending is Issuer Solutions contract. of the first Islamic credit card provided by the cardholder’s issuing for a bank customer in Jordan. bank). We have also expanded our contracts with UAE based tourism Contract renewals: We renewed a authorities that will see them significant contract with Abu Dhabi leverage merchant spending data Commercial Bank to provide fully in order to better understand outsourced Merchant Solutions and domestic consumer and tourist we also renewed our Issuer Solutions spending patterns. contract with United Arab Bank.

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Chief Executive Officer’s Review continued

Cross-sell of products: We continue their consumers state-of-the-art in which we operate. In 2020 we to upsell to existing customers payment solutions including digital began working with an expert third across the region, signing expanded wallets, person-to-person (‘P2P’) party on the development of a new contracts with Polaris Bank Nigeria payments and virtual cards. The ESG Strategy. This includes a gap and ARCA Nigeria, e-commerce launch of this platform is the first in analysis to benchmark our existing Merchant Solutions using our a series of steps towards delivering approach against international N-Genius™ payment gateway for simplified, collaborative payment sustainability best practice, prevailing NBS Bank Malawi, and the rollout solutions across the payments value legal requirements and evolving of our N-Genius™ POS devices chain in the Middle East and Africa. stakeholder expectations. The continues with Standard Bank and outputs from this process will inform Orabank across eight countries. Accelerating growth through the the development and rollout of the We are also working towards proposed acquisition of DPO new strategy in 2021. N-Genius™ gateway implementation We continue to progress towards with customers after certification completing the acquisition of DPO. Our colleagues are at the heart of our in five countries. Regulatory approvals are still business and are instrumental in the outstanding in a small number of delivery of our strategy. We are very New market entry: In Africa we will countries, which we expect to finalise pleased to have seen the results of be launching services in Sudan, a and complete in the second quarter. our annual Employee Engagement new market entry which has been DPO is the largest online commerce Survey during the period. Overall supported through our partnership payments platform operating at scale we saw both an improvement in with Mastercard. We will be providing across Africa, offering online and survey participation, where 83% of Issuer Solutions to Faisal Islamic Bank mobile money payment services to colleagues participated (2019: 72%), by enabling the bank to issue and over 59,000 active merchants across and a significant step up in overall accept Mastercard branded debit, 19 countries. DPO benefits from a well engagement to 73% (2019: 65%). credit and prepaid cards through invested technology platform with Colleagues were also highly satisfied ATMs, POS terminals and online. a unique combination of intellectual with the business’s approach to This makes Faisal Islamic Bank one property, products, licences and employee wellbeing, care and remote of the first in the country to obtain partnerships in multiple markets, working arrangements through the a card issuing and acquiring licence which is particularly advantageous COVID-19 pandemic. from Mastercard. to global merchant brands operating across the continent. The acquisition As a digital payments provider, Executing on our strategic will further consolidate our presence our business activities support and partnership with Mastercard in Africa, strengthening our position promote the financial inclusion of Our strategic partnership with across the entire payments value communities across the markets in Mastercard is progressing well chain and accelerating our growth. which we operate. This includes our and we have launched a new Whilst the acquisition is not yet ongoing participation in the ‘Smart digital product platform which will complete and the 2020 financial Dubai Government’ initiative which accelerate the adoption of digital performance of DPO is not works to accelerate the adoption of payments across all our markets. consolidated within our financial digital payments across the Emirate, With this new digital platform we results, we are providing an indicative or our support of Egypt’s Meeza will help our customers to enable business and trading update for national payment scheme. In mobile-based payments for their end DPO. The business is performing addition, our support for community consumers and merchants across well, having seen over 30% y/y development projects helps us to various payment channels. Merchants TPV growth in constant currency. deliver further social and economic will now have one simple to use benefits at a local level. In 2020, over technology interface through which Our commitment to a sustainable 140 colleagues volunteered in local they will be able to accept multiple and responsible business community initiatives. The Group also payment types, ranging from We are committed to operating collaborated with or made charitable USSD (text message), QR codes, sustainably and responsibly across donations to community organisations to POS terminals and e-commerce, our entire business. We aim to that support food distribution, cultural with mobile money and SoftPoS operate in a way that maintains development and individuals with (technology which allows merchants strong ethics, respects human rights, additional needs across the UAE, to accept contactless card payments supports responsible labour practices South Africa and Egypt. directly on their smartphone or and safeguards the environment – tablet) coming later in 2021. Payment while promoting positive social and Responsible Business issuers and banks will be able to offer economic impacts in the markets See page 56

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 17

2020 financial year. This decision has been taken after careful consideration and in order to ensure capital allocation is prioritised towards such opportunities that will drive growth, generate attractive returns for shareholders and also to maintain financial flexibility.

Outside of core investment, we will deploy capital to continue the separation of shared services from Emirates NBD. This includes the separation of a shared data centre in the UAE and the deployment of independent human resources and finance systems in order to improve our operational flexibility. We also remain excited by the opportunity in Saudi Arabia, which is one of the largest payments markets in the MEA region. We intend to progress Future strategic focus Our Mastercard partnership will with our market entry as soon as As the digital payments leader in focus on the rollout of the newly border restrictions ease and when markets with significant structural launched commercial card solution, this occurs, we will update investors and secular trends, Network the digital payment platform and on the financial opportunity and International has strong foundations. executing against our market entry expected returns from this new Whilst our overall strategic approach to Sudan. We will also continue market entry. Our capital investment remains consistent, a CEO transition working together to explore the budget for Saudi Arabia remains the will bring elements of change and development of low cost payment same as previously communicated new ideas. We intend to ensure that acceptance solutions which are and is incorporated in our 2021 we remain at the forefront of rapidly targeted at the African market. financial guidance. evolving customer needs so that we can grow our share and extend Completion and integration of DPO: In summary: We have started to see our leadership position across our Whilst ensuring post-completion a recovery from the impacts of the markets. Our strategic aspirations will that DPO continues to grow its TPV pandemic and the underlying drivers place more focus upon acceleration and revenues ahead of the market, of the business and our markets and innovation in order to deliver we will work hard to cross-sell remain strong. We have seen some profitable high growth. DPO’s services to our existing bank headwinds to trading during the customers in order to support the initial months of 2021, linked to the Core business and Mastercard delivery of revenue synergies. rise in COVID-19 cases across the strategic partnership: We will UAE and some restrictive measures continue to support our merchant Capital allocation and Saudi Arabia that have been introduced. Whilst and financial institution customers market entry: Our capital allocation the fluidity of the pandemic creates through their ongoing recovery from policy is designed to support both some uncertainty our overall outlook COVID-19. In our acquiring business the core business and growth is unchanged at this stage. There is we will place emphasis on growing opportunities, whilst generating an intense focus on strong execution high value merchant sectors within appropriate returns. In such and maintaining the good momentum the online and SME segments, and attractive markets our business has in the business. providing further value to merchants substantial opportunities to deploy through the launch of interactive capital through both organic and data and spending analytic inorganic investment, in order to Nandan Mer dashboards. In Issuer Solutions we deliver incremental profitable growth Chief Executive Officer will have a strong focus on new and returns. Given our conviction 7 March 2021 business generation, including the around the potential growth cross-sell of value added services opportunities for the business, the such as our digital payment platform Board has decided not to declare into the existing customer base. an ordinary dividend in respect of the

Network International Holdings Plc Annual Report and Accounts 2020 18

Our Strategic Framework

Focused on profitable growth now and for the future

Our purpose is to enable and lead the transition from cash to digital payments across the Middle East and Africa.

Create a Network Strong risk management Culture for our people and governance framework Read more on page 56 Read more on page 72

1 Capitalise on digital 2 Expand customer base 3 Develop commercial payments adoption and and focus on high value arrangements with enable financial inclusion segments strategic partners Goals Goals Goals › Support structural market growth in digital › Expand our range of services to › Develop relationships or commercial payments through leading capabilities existing customers agreements to support the execution › Increase consumer access to digital › Win new processing customers by capitalising of our strategy; that underpin or enhance payments through building low cost solutions on our scale and service advantage our market knowledge, distribution or › Support financial inclusion initiatives by › Win merchants in high value segments such product capabilities working with governments and NGOs as SMEs, hospitality and online payments Progress in the year › Explore and develop our solution to mobile Progress in the year › Developed the first set of product money payments › Renewed significant contracts with key initiatives with Mastercard as part of our Progress in the year customers such as: ADCB in the UAE, United commercial agreement, which includes › Expanded our work with the UAE Arab Bank across the Middle East and the digital product platform and corporate governments to include northern Emirates’ Woolworths Financial Services in South Africa card solutions Smart Governments, along with Smart › Signed multiple new Issuer Solutions › Increased our online digital partner Dubai Government customers network to include global/regional › Supported Egyptian bank customers with › Expanded Issuer Solutions services and payment service providers Central Bank of Egypt initiatives to rollout an contracts for: RCS Group in South Africa, › Executed on our strategic partnership additional 100,000 point-of-sale acceptance Fidelity Bank Ghana, GTBank in Côte d’Ivoire, with CR2 in Africa, to accelerate managed points across the country Rokel Commercila Bank in Ghana, Access services of digital banking channels › Made preparations to extend our capabilities Bank in Ghana, Access Bank in Nigeria and Future focus and digital solutions offering in Saudi Arabia Tyme Bank in South Africa › Continue to deliver on commercial › Signed new merchant relationships, Future focus initiatives with Mastercard and including: Alexander McQueen, Adidas and › Support the UAE governments with digital strengthen our strategy to take digital Luxury Fashion Gulf, online acquiring wallet rollout and e-dirham expansion plans and e-commerce solutions to market for Spinneys supermarkets and NowNow › Leverage our role in Dubai EXPO2020 › Target new partnerships with mobile (part of Noon Group) › Identify opportunities to work with network operators, online payment › SME merchant sales and relationship strategy governments and NGOs to support digital service processors, Fintech businesses refreshed and significant growth in business payments adoption across our markets and payment aggregators to unlock the › Developed new ‘Customer Value › Continue to explore ways to work with digital and alternative payments markets Propositions’ for key acquiring segments, mobile money solutions and operators › Assess and pursue strategic partnerships such as hospitality, SME and healthcare with existing clients Future focus › Target new bank payment processing outsourcing contracts and expand relationships with existing customers › Focus on high value customer segments and sectors along with Fintech businesses › Leverage existing relationships and focus on cross-sell opportunities between business lines

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 19

Capitalise on digital payments adoption and enable financial 6 inclusion 2 Pursue Expand customer opportunities base and focus on for acceleration high value segments

Our strategic pillars 5 3

Leverage Develop technology and commercial build capabilities arrangements with strategic 4 partners

Product expansion and market penetration

4 Product expansion 5 Leverage technology 6 Pursue opportunities and market penetration and build capabilities for acceleration Goals Goals Goals › Develop best in class products that enhance › Ensure we have the capabilities and › Through both accelerated organic speed, efficiency and value for customers scale to support our growth and acquisitive options, focus on › Adapt products to the local market to › Optimise and invest further in our opportunities that will: consolidate enable rollout across the region technology infrastructure or expand our geographic position › Bring value add insights to customers › Enhance responsiveness and efficiency in the MEA; or provide new product through our data analytics capability through creating shared service principles or technology capabilities › Digitise customer facing and support Progress in the year Progress in the year functions to optimise efficiency and › N-Genius™ point-of-sale devices successfully › Announced the acquisition of DPO, governance deployed across eight countries in Africa, the largest online commerce payments with key customers such as Standard Bank Progress in the year platform operating across Africa and Orabank › Network ‘New Ways of Working’ has been › Updated our preparations and plans to › Ongoing rollout of N-Genius™ point-of-sale launched to optimise resources, automate extend our services into Saudi Arabia, devices across the regions processes and create capacity across in anticipation of market entry › Enabling MIR acceptance (the Russian credit the business Future focus card scheme) across our merchant point-of- › Plan for separation of shared services and › Complete the DPO acquisition, with sale terminals technology resources from Emirates NBD a focus on integration and delivery of › Expanded our N-Genius™ online gateway › Update the technology strategic plan for organic and synergy growth targets sales to c.1,900 merchants across the UAE entry to Saudi Arabia in anticipation of › Commence entry into Saudi Arabia market entry Future focus market when COVID-19 related border › Ongoing enhancement to risk and › Continue rollout of the N-Genius™ product restrictions ease control functions platform to existing and new customers › Target further growth accelerator across the MEA Future focus opportunities, such as significant payment › Develop best in class products that enhance › Ongoing enhancement of our processing outsourcing contracts speed, efficiency and value for customers technology platforms › Launch and rollout our digital product › Continue advancing the separation platform, delivering new issuing and of shared services from Emirates NBD acceptance capabilities across the entire › Continue the entry and deployment of payments value chain our capabilities into Saudi Arabia › Continue to develop data analytics solutions › Enhance data analytics capability: to serve for customers customers and enhance internal processes We have 11 principal risks that apply to each of our strategic pillars See page 79

Key Performance Indicators See page 26

Network International Holdings Plc Annual Report and Accounts 2020 20

Strategic case study

Building long-standing customer partnerships

Underpinning the strength of our business model.

From acorns to oak trees Our business is built on the strength Supporting ADCB with fully and depth of relationships with over outsourced services across 80,000 merchants and over 200 financial institution customers. Merchant and Issuer Solutions It takes years to build customer Abu Dhabi Commercial Bank (‘ADCB’) is one relationships of this scale, which is of our largest customers in the Middle East. reflective of our market leading Our partnership started in 2005, with services and technology platforms, Network International providing outsourced and trusted reputation. Such Issuer Solutions. relationships typically start small and Over time, we have become an outsourced expand over time; as we become a processor for the entirety of ADCB’s credit trusted partner, see our services grow card portfolios. In 2017, ADCB decided to as our customers grow; and as we capitalise on the scale of their business banking develop innovative solutions to meet relationships and move into merchant acquiring. the evolving payments landscape. Having already worked hand in hand with ADCB to provide Issuer Solutions services, we were a natural partner. We are currently providing fully outsourced Merchant Solutions services, including: acquirer processing, merchant support, onboarding e-commerce merchants 15 years and procurement of point-of-sale terminals. average tenure of our Our relationship is based upon strong 1 customer relationships commercial foundations and the beneficial economics of outsourced payments solutions, which delivers outstanding service to ADCB’s customers and a growing revenue stream to Network International. The strength and benefits of the relationship to both parties is reflected in the recent renewal of our contract to provide Merchant Solutions services for a further five-year period.

1 Refers to average tenure of relationship with top 10 customers.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 21

Our role is to support our customers in bringing digital payments to more consumers. Issuer Solutions services for RCS Group Our 15-year partnership with RCS typifies the development of our relationships with Issuer Solutions customers. What may start as a small card processing outsourcing agreement, often expands across For merchants, what may start with multiple portfolios, services and providing point-of-sale in-store digital countries over time. transaction acceptance, often evolves with increased scale, omnichannel RCS, a division of BNP Paribas solutions and value added services Personal Finance, is a consumer over time. financial services provider operating across Southern Africa. Carrefour is a long-standing merchant Our partnership began in 2006, customer, going back 18 years. Having with outsourced processing started our partnership as their acquirer services for their retail store cards. of choice in Dubai, we have grown our From the initial portfolio of just over volumes and services alongside them 1m cards, we now provide issuer as they have expanded across the processing services for their entire Emirates, moved to innovative self card portfolio of over 4.5m cards checkout and into online acquiring. across five countries, alongside data analytics and risk management Carrefour was also the first and largest services. We are also supporting grocery merchant in the region to them as they transition to become accept the NOL prepaid smartcard, a global card scheme issuer with which has increased the range of Mastercard and Visa. payment options for the end consumer.

Network International Holdings Plc Annual Report and Accounts 2020 22

Strategic case study

In response to COVID-19, we are seeing strong demand from merchants who want to shift Dubai Duty Free their traditional in-store business Moved to our N-Genius™ online gateway during 2020. This now to an omnichannel approach. provides Dubai Duty Free with a user friendly and simplified payment processing experience, by partnering with Network The pandemic has accelerated consumer and merchant International across the entire acquiring value chain, as a demand for online payments. Through 2020, we saw 53% processor, acquirer and 1 y/y growth in our online directly acquired TPV , compared gateway provider. with 16% y/y growth during 2019. We have also won a number of mandates to facilitate online payments for merchants; and formed partnerships with multiple global brands in the online acquiring space.

“ At Al Fardan Exchange, we are very happy to partner with Network International and use their proprietary payment gateway, N-Genius™ online. This has completely revamped the payments experience of our customers, with the new technology and robust infrastructure.”

Al Fardan Exchange

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 23

Enabling a smooth transition to e-commerce

Supporting merchants through offering more payment options to their customers.

Accepting online payments A payment gateway is a collection E-commerce and online payment of online services and software that acceptance is still relatively nascent in enables merchants to accept customer our regions. In the UAE for example, less payments through their website, mobile than 20%2 of TPV across the Emirates applications, and email payment links. come from online transactions.

But consumer demand is changing, and in our fast evolving market place, merchants increasingly need to be positioned to accept online payments, as well as in their stores, outlets and offices.

N-Genius™ online payment gateway

N-Genius™ is our proprietary online payment acceptance gateway. We provide the gateway either directly to merchants in the UAE and Jordan, or on a third-party basis to our bank customers.

N-Genius™ online allows merchants to accept payments in real-time from their consumers, either online, or from a mobile phone (PayByLink or QR code enabled). The gateway has market leading transaction acceptance rates and a wide range of payment options.

Having launched the gateway in 2019 we have seen good uptake by customers, such as Dubai Duty Free c.1,900 53% customers signed to y/y growth in our and Mahzooz, and particularly strong N-Genius™ online online payment TPV1 demand through the pandemic.

1 Excluding Government and airline online TPV. 2 Source: EDC market sizing report 2019 forecast. Based on regional market data.

Network International Holdings Plc Annual Report and Accounts 2020 24

Strategic case study

Supporting our talented workforce

Our people are at the heart of our business. Indeed, our current and future success relies on our ability to attract, develop and retain the top global talent in our industry.

Ensuring the well-being of our people navigate the COVID-19 pandemic. We are committed to ensuring that our Furthermore, we recognise the people are engaged, motivated, happy immeasurable value that a diverse and safe at work. Never has this been workforce brings in terms of driving more important than during 2020, as we innovation, creativity and the sharing have worked together to successfully of new ideas across our business.

Creating an environment where our people can thrive We work tirelessly to build and maintain a supportive and nurturing workplace. Our efforts include:

› Employee engagement: We maintain › An equal, diverse and inclusive working a range of digital communication environment: We promote the fair channels to support and encourage open treatment of all employees, irrespective communication between employees and of personal characteristics. As reflected managers. We also undertake Group- in our revised Equality, Diversity and wide engagement surveys to ensure we Inclusion Policy, we place particular remain responsive to employee views. emphasis on promoting gender inclusion and equality across our workforce. › Talent management: Our holistic approach is underpinned by our Talent Management Framework. This supports the development of our employees across the different stages of their careers, whilst helping to ensure they are engaged and consistently perform to the best of their abilities.

› Group-wide employee benefits: In addition to competitive base salaries and performance-linked bonuses, we offer Group-wide benefits ranging from extended maternity and paternity leave, to healthcare cover and competitive pension plans.

› Learning and development: Our approach to learning and development (‘L&D’) is underpinned by a robust L&D architecture, which supports the 1,309 3.8% Total workforce Employee turnover rate implementation of a consistent, responsive (2019: 1,309) (2019: 7.1%) and centrally managed learning model. This has been strengthened by our new L&D Charter, which we rolled out during the year to further define our development vision, objectives, and To find out more about these and other related roles and responsibilities. efforts see ‘Helping our People Thrive’ See page 60

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 25

Empowering diversity and progress in the workplace by treating everyone with respect, dignity and fairness.

“ It feels good to be part of Empowerment initiatives an organisation that upholds Are supported throughout the diversity and acknowledges organisation, from the Executive level and throughout the that excellence does not workforce. Just one example is recognise gender. Network our ‘This Girl Can’ initiative. This is focused on creating a safe International empowers space and networking group women to thrive in a safe, to discuss challenges faced by secure and inclusive women who work across our Africa team. Helping them to workplace where people learn additional skills and tools with diverse backgrounds to develop in the workplace.

can work and grow together.” We have also expanded our networking and skills Desiree Daniels: Responsible Business development sessions for Champion, South Africa female employees from the UAE to all of our regions. These sessions, which are open to all female employees, focus on areas such as pitching / 73% presentation skills, negotiation Group-wide employee skills and conflict resolution. engagement score (2019: 65%) 54 Nationalities represented across our global workforce (2019: 53)

Network International Holdings Plc Annual Report and Accounts 2020 26

Key Performance Indicators

Measuring our progress

We use financial and operational metrics to measure the progress of our strategic goals.

Financial

Revenue 2020 284.8 Definition Total revenue generated USD 284.8m 2019 335.4 by the Group. (15.1)% 2018 298.0

Underlying EBITDA1 2020 112.6 Definition Earnings before interest, taxes, depreciation & USD 112.6m 2019 168.5 amortisation (‘D&A’), impairment losses on assets, (33.2)% gain on sale of investment securities, share of 2018 147.4 depreciation of an associate and Specially Disclosed Items (‘SDIs’) affecting underlying EBITDA.

Underlying EPS1,3 2020 6.7 Definition Profit from continuing operations adjusted for USD 6.7 cents 2019 17.7 impairment losses on assets, gains on disposal (62.1)% of investment securities and SDIs; which is 2018 17.5 divided by the weighted average number of shares outstanding.

Operational

Total Processed Volume2 (‘TPV’) 2020 33.5 Definition The aggregate monetary value of purchases USD 33.5bn 2019 43.8 processed by the Group within its Merchant (23.4)% Solutions business line. 2018 39.9

Number of cards hosted2 2020 16.2 Definition The aggregate number of cards hosted and 2019 14.2 billed by the Group within its Issuer Solutions 16.2m business line. +14.1% 2018 13.6

Number of transactions2 2020 758.1 Definition The aggregate number of transactions 758.1m 2019 752.0 processed and billed by the Group within +0.8% its Issuer Solutions business line. 2018 681.4

2019 and 2018 financial KPIs have been reclassified according to the presentation of our financial statements in 2020. For further detail on the reclassifications please refer to the CFO Review. 1 This is an alternative performance measure (‘APM’). See note 4 of the consolidated financial statements for APM definitions and the reconciliations of reported figures to APMs. 2 This is a KPI. For definition please refer to page 55. 3 Share count impacted by issuance of 50m additional shares for DPO acquisition.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 27

Our KPIs are all closely Importance aligned with our six Growing revenue across the Group strategic priorities indicates underlying market growth and share gains. 1 Capitalise on digital payments adoption and enable financial inclusion Importance By choosing to invest in and grow the business, we enable ongoing 2 profit growth. Expand customer base and focus on high value segments

Importance Ensures a focus on the entire income 3 statement, profitable growth and shareholder value creation. Develop commercial arrangements with strategic partners

4 Product expansion and market penetration Importance Processed volumes indicates the underlying growth and health of the Merchant Solutions business. 5 Leverage technology and build capabilities

Importance An indicator of the underlying growth and health of the Issuer 6 Solutions business. Pursue opportunities for acceleration

Importance An indicator of the underlying Read more growth and health of the Issuer See page 18 Solutions business.

Network International Holdings Plc Annual Report and Accounts 2020 28

Stakeholder Engagement

Section 172 Directors’ Duties Our engagement The Board is aware and highly supportive of its duties to promote the success of the Company in accordance with section 172 of the Companies Act. A summary of with major how we deliver for our stakeholders is outlined below. Further details on the Board’s activities stakeholders in relation to stakeholder engagement are included on page 88

Our customers

The trust of our customers has been Through the pandemic, supporting fundamental to our success and the length customers remained a business priority; of our relationships with our merchant and we provided fee reductions for a number issuing customers are testament to the of SME merchants and assistance in strength of those partnerships. Overall transitioning their businesses online; whilst responsibility for customer relationships in Issuer Solutions, we assisted bank and engagement lies with our local customers and their cardholders by regional relationship managers. Our key enabling payment holidays, or extending merchant and issuing customers will expiries on cards where suppliers could have a dedicated account or relationship not guarantee a replacement. >80k manager, who at a minimum will host merchant customers monthly and quarterly meetings, which The development of our existing have mainly taken place in a virtual customer relationships, as well as the environment this year. signing of new customers, is discussed >200 in more detail in the CEO’s Review see financial institution customers We were able to successfully host a page 14, as well as in the Operating three-day conference for African Review, see page 30. customers, in Egypt, prior to the CEO’s Review COVID-19 pandemic, which gave our See page 14 customers the opportunity to network with peers, the Network International team, and understand future service and product development.

Our people Our communities

We place enormous focus on the support, We are committed to having a positive talent development and engagement impact upon our host societies and as of our people. A detailed review of our a digital payments provider throughout employee support and engagement our regions, our business activities policies can be found on page 62 of support and promote the financial the Responsible Business section. inclusion of communities. Our support for community development and charity During the year, we enhanced our projects helps us to deliver further social engagement with colleagues to ensure and economic benefits at the local level. they kept safe and were fully supported Our generation of economic value is 73% whilst working from home. To ensure distributed to investors, employees employee there was a regular flow of information and other stakeholders. engagement score and opportunities for giving feedback we launched a range of virtual A detailed review of our community engagement mechanisms, which are engagement policies can be found on page more fully described on pages 62 68 of the Responsible Business section. and 63. As part of their oversight responsibilities, a Board level review Corporate social was undertaken in line with the AED 5m responsibility requirements of the UK Corporate in donations and discounted fees See page 59 Governance Code. to support UAE small businesses through the pandemic

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 29

and scale of services, this process We have also implemented a may also include an operational risk performance development plan and compliance assessment, financial which was established for the first stability checks, data protection and time in 2019. This is aimed at cyber security assessments. strengthening suppliers’ performance and capabilities, based on five main Our Vendor Code of Conduct categories: quality of service, delivery encompasses principles and timelines, responsiveness, and price expectations as to how our suppliers and technology capabilities. During conduct business, and engage, with 2020, we carried out over 40 supplier us. These expectations encompass evaluations to assess their capabilities, business integrity; the treatment and to ensure that both customers Our suppliers of employees and compliance with and suppliers work in harmonisation modern slavery requirements; for improved service levels. We saw We are supported by a number of anti-bribery and anti-corruption a significant improvement in scoring third-party suppliers, to enable us standards; safeguarding of data when compared with the 2019 outcomes. to deliver high-quality service to our and confidential information; and customers. We are committed to a commitment to promoting To maintain continuous support maintaining a reliable and ethical environmental sustainability. and manage any potential supplier supply chain and to achieve this we risks, periodic on-site reviews were work with our suppliers in a number of In order to support our suppliers and conducted for certain suppliers during ways – through detailed due diligence work collaboratively, we have placed an the first quarter of 2020. In response at the start of the relationship; getting emphasis on relationship management. to COVID-19, an additional assessment our suppliers’ commitment to abide by We encourage our suppliers to provide was conducted for 80 vendors in our Vendor Code of Conduct; regular our colleagues with training, so that we order to assess their resiliency and interactions to ensure we are working can better understand their technical ability to continue to provide together collaboratively; and supplier services and approach. This is uninterrupted services. evaluation throughout the relationship supplemented by regular discussions to assess the quality of service and to address resolution management minimise any risks. and improved ways of working on both sides. We have also implemented a Supplier due diligence is conducted ‘purchasing plan’ with some suppliers before on boarding new third-party to provide them with advance notice Corporate social suppliers. Depending on the scope of our requirements to allow them to responsibility prepare accordingly. See page 59

Our shareholders

The Executive Management Team, the sellside analyst community. Lines Investor Relations team, and members of communication with shareholders of the Board have engaged frequently are supplemented by announcements with institutional shareholders, and trading statements, alongside and potential shareholders. Whilst information and presentations posted COVID-19 prevented in-person to the corporate website. During the meetings, these were substituted year we increased the number of with virtual meetings. The Board scheduled announcements to the was cognisant of the shareholder market, in light of the pandemic, and experience during the year, and open also significantly increased our data USD 6.7cents to understanding feedback and issues and financial disclosure. underlying EPS1 raised by the market. This informed our decision to increase engagement The Chairman also met with a number of and enhance financial disclosures. shareholders during the year, to discuss USD 1.2cents matters of Corporate Governance and reported EPS The Executive Management Team broader strategic topics; whilst the and Investor Relations team have Chair of the Remuneration Committee, participated in over 800 meetings Victoria Hull, consulted with major with over 270 institutions, including shareholders regarding the proposed CEO’s Review CFO’s Review sector conferences and a wide range Remuneration Policy during the period. See page 14 See page 42 of virtual fireside meetings hosted by

1 This is an alternative performance measure (‘APM’). See note 4 of the consolidated financial statements for Network International Holdings Plc APM definitions and the reconciliations of reported figures to APMs. Annual Report and Accounts 2020 30

Operating Review

Merchant Solutions

Merchant Solutions revenue We provide services and solutions that allow over 80,000 merchants to accept USD card or digital payments from consumers, through a 109.4 broad range of omnichannel million products that can accept multiple payments types. In Merchant Solutions, we provide direct acquiring services to merchants, as well as white-label and acquirer processing services to bank customers.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 31

Direct acquiring and How we generate our acquirer processing services revenue in Merchant Direct acquiring: Solutions: In the UAE and Jordan, we contract directly with merchants for their acquiring services, all under our own brand and for which we assume the › Transaction based revenue: credit risk. We provide solutions that The aggregate value of digital allow merchants to accept digital transactions processed by consumer payments and facilitate our merchant customers is those transactions by obtaining known as the Total Processed authorisation with the payment Volume. Our revenue is the schemes before settling the transaction Net Merchant Service Fee, into the merchant’s bank account. which is based on a percentage of the TPV. The Net MSF is White-labelling and the resultant charge after acquirer processing: interchange (paid to card We provide acquirer processing issuing banks) and scheme services to bank customers, which fees (paid to card schemes allows them to maintain merchant such as Mastercard or Visa) relationships and retain the credit are deducted from the Gross risk, whilst we provide the processing MSF charged to a merchant. function and operations support. This provides banks with a market- › Non-transaction based leading solution without the need revenue: Fees from Value for significant investment or Added Services, rental streams additional capabilities. from POS terminals and project related revenues. Value Added Services: We also provide merchant customers with a wide array of additional services that complement our core direct acquiring offering, including:

› Loyalty programmes to help › SmartView Interactive Dashboard customers drive repeat sales and and Performance Reports provide increase loyalty. in-depth analysis of a customer’s business based on key payments- › Dynamic Currency Conversion related metrics. (‘DCC’) and Multi-Currency Omnichannel payment Pricing (‘MCP’) allows merchants › 3DSecure is an industry standard acceptance solutions to allow consumers to pay in their card security solution which home currency, while facilitating reduces online fraud and increases the foreign exchange conversion protection for both merchant and merchant payment. customers and their consumers. › Easy Payment Plans that allow › Digital Onboarding offers a secure, Our products that allow consumers to convert high flexible, and fully automated merchants to accept digital value purchases into monthly solution that allows SME customers payments instalments, although we do to be onboarded digitally in a not bear the credit risk as a part swifter timeframe. of this service. Offline: › Data analytics and insights to help Through our N-Genius™ merchants and customers better POS terminals understand consumer spending Newly launched smartphone patterns and other dynamics. payment acceptance app

Online: Through our proprietary e-commerce payment gateway, N-Genius™ online

Network International Holdings Plc Annual Report and Accounts 2020 32

Operating Review continued

Merchant settlement processes in the ‘merchant creditors’ balance The relative movements of scheme on the Group’s consolidated balance debtors and merchant creditors In the direct acquiring business, sheet. We subsequently receive often follow a similar trajectory, Network International is responsible funds into our bank accounts although there are a number of for the settlement of funds to through the scheme settlement circumstances in which they can merchant customers, and assumes processes on T+2 and from any vary. For example: i) if the period end the credit risk associated with this. issuing banks on T+1. These balances falls on a weekend, when banks are This settlement process is a funding are included in the ‘scheme debtors’ closed in the US but open in the UAE, cycle that iterates daily, and is balance. At any given point in time this creates a snapshot of elevated reflective of the TPV, processed there will be around two days of settlement balances because it on behalf of merchant customers, ‘scheme debtor’ receivables pending causes an extra day delay (‘T+2/3’) in the immediate preceding days. to Network International, whereas in receipt of funds through the ‘merchant creditor’ payables are scheme settlement processes; In line with general market practice outstanding for only a day. As a ii) currency mix of TPV, which can in the Middle East, when a consumer result of this, a working capital impact scheme settlement timelines; conducts a digital transaction with requirement arises equal to these iii) there are small number of a merchant, Network International settlement balances. This working merchants who are not settled daily; generally remits cash due to the capital requirement is funded by our iv) TPV in the last few days prior to merchant on the day following the banking partners via an overdraft period end. transaction (‘T+1’). These balances facility which is continuously settled payable to merchants are included as the schemes remit money to us. Restricted cash balances should be considered separately, and are discussed in the next section, related to chargebacks and collateral. How we generate our Net Merchant Service Fee (MSF)

CASH CONVERSION Our revenue is the Net Merchant Service Fee (‘MSF’), Bank Net MSF remittance which is based on a percentage paid directly to Network of the TPV. The Net MSF is account International – The the resultant charge, after resultant charge after interchange and scheme interchange and scheme fees fees are deducted. are deducted from the Gross MSF charged to the merchant.

% Scheme fees

CASH TO MERCHANT

the Gross MSF % Issuer/banks

Day of PROCESS TIMELINE PROCESS TIMELINE transaction T+1 T+2/3

A consumer pays a merchant Network remits cash due Network collection for goods/services to the merchant collects from the is responsible for the settles the merchant for schemes and issuing banks, settlement of funds to merchant the value of the transaction, typically for the value of the transaction, customers. No cash released on T+1 basis; post authorisation from minus the interchange and by Network International until the payment schemes. scheme fees as applicable. authorised by schemes/issuers.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 33

Chargebacks and collateral If a consumer contests a transaction with a merchant, and the merchant is unable or unwilling to provide a refund, Network International holds the potential liability for that transaction. Where the consumer is unable to receive redress from the merchant, the consumer may raise a refund request with their card issuer. For example, if the consumer is dissatisfied with goods or services purchased, if there is non delivery of goods or services, if the transaction is fraudulent, or if the cardholder was charged but the transaction did not complete due to technical issues. In the ordinary course of business, refunds will be the responsibility of the merchant. However, if the merchant is unable to cover the cost of the refund, the acquirer will be liable for the transaction.

In order to manage our risk Risk management of appropriately, Network International merchant customers holds collateral against selected We process all the transactions merchants where we see a higher associated with the merchant risk of potential chargebacks. acquiring business line, through Such collateral can be held in the our own platforms, and do not form of restricted cash (where we rely on third parties to conduct defer payment of a proportion such activities. parameters and ensure that the of the settlement funds otherwise aggregator follows our credit risk due), or we receive a cash deposit We follow a thorough risk assessment management guidelines. Whilst from the merchant. process before onboarding any the aggregator holds the merchant merchant. This involves KYC (Know relationship, Network International As a result of these risk management Your Customer) and AML (Anti- will also undertake KYC checks on disciplines, Network International Money Laundering) checks, as well as each of the merchants contracted has historically low chargeback risk based underwriting to assess the through the aggregator. losses, which in 2020 were only credit worthiness of the merchant. 0.003% of TPV. Network International does not The vast majority of our direct provide any merchant lending, or acquiring business is through merchant cash-advance services, direct relationships with the and therefore we have no financial merchant. However, we also process risk associated with such services. transactions for merchants who contract with an aggregator partner. An aggregator will work with a number of merchant customers, which are typically SME businesses. 0.003% Whilst Network International chargeback loss as a % of TPV contracts with the aggregator, it is the aggregator who contracts with the end merchant and ultimately bears the credit risk. When we work with aggregators, we agree the associated risk appetite and

Network International Holdings Plc Annual Report and Accounts 2020 34

Operating Review continued

Issuer Solutions

Issuer Solutions revenue Our Issuer Solutions business supports financial institutions in the region, USD where we act as an outsourced service provider 165.0 to manage their card million operations – across debit, credit, prepaid, virtual, ATM, or retail cards.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 35

Issuer processing solutions › Advanced Fraud Solutions, How we generate our 3D Secure and Falcon is a We provide outsourced processing revenue in Issuer comprehensive, end-to end fraud services for card issuing financial Solutions: management solution for financial institution customers. We connect institution customers to defend these card issuing customers with against card fraud. card schemes (such as Mastercard and Visa) to facilitate, authorise and › ATM solutions include our There are three revenue streams settle transactions for their card operating of JONET, the principal in Issuer Solutions: holding consumers. Network ATM switch in Jordan, which International is not an issuer of connects member banks and › Revenue per card hosted: cards, and we do not provide lending payment schemes to support A fee based on the number to consumers or cardholders. cash withdrawals and other of cards hosted for a customer ATM services. (not linked to the number Card solutions › Data analytics provides financial of transactions conducted We provide financial institution institutions with insights, SmartView on the card). customers with the ability to open dashboards and insights related to card accounts for consumers, and › Revenue per transaction: spending and transaction patterns issue and create a range of card A fee per transaction of cardholders. products, including credit, debit processed on a card (not linked and prepaid cards. We allow them › Card Control is a tool that allows to the value of the transaction). to manage the entire life cycle of cardholders to control the types of › Value added services: cards issued through our advanced transactions they approve on their A blend of fixed fees, or fees Card Management System, which cards, providing them with more linked with cards hosted, has the ability to manage over 200 control while reducing instances or transactions processed. card types. Through this service, of fraud for card issuers. customers do not have to develop › Instant Issuance enables instant their own in-house technology or issuance of debit, credit and operations capability, reducing their prepaid cards as well as activation long-term costs as a card issuer. and PIN set up, either at our customers’ branches or other Value Added Services specified locations. As with our Merchant Solutions business, we also offer a set of › Loyalty Programmes enable products and Value Added Services financial institutions to manage to complement our core processing loyalty programmes including cash capabilities, such as fraud solutions back rewards, points and miles. and data analytics. › Electronic Billing is a payment service that allows financial institutions to offer a comprehensive utility bill payment service to their customers through their website or ATMs.

Network International Holdings Plc Annual Report and Accounts 2020 36

Operating Review continued

Technology

Network has recently invested in the development, and completion, of two core payment processing platforms, Network One and Network Lite. The core systems used to power our platforms are commercial solutions from leading international technology providers. These have been supplemented with adjacent systems and services to provide a flexible, predictable and robust operating model that delivers high-quality payment processing solutions for all our customer needs.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 37

Network One

Network One is a one-stop solution switching platform supplied by for payment processing that is ACI-worldwide, to provide switching highly scalable and available, capability to manage the payments and services the most advanced transaction traffic to and from card requirements of our customers. schemes. Network One also offers a It serves both Issuer Solutions and sophisticated range of Value Added Merchant Solutions needs, and is Services through an integration designed and engineered using layer, enabled by our proprietary the Way4 card and merchant application programming interface management system from the (‘API’) technologies, that connect OpenWay Group. We have directly to our customers. integrated this with the Base-24

Network Lite Our strategic approach to technology

The Network Lite platform is a From a technology perspective, to support financial institutions compact yet powerful system, the services provided by Network in providing loyalty services to designed to meet the core International can be categorised their customers; as well as a risk processing needs of the African under four main areas: Issuing management solution that helps customer market. It uses an services, Acquiring services, card holders control card usage integrated software solution Switching services and Value and increase security. from Compass Plus known Added Services. The need to stand out in an as Tranzware; and supports ever changing market requires debit, credit, ATM and acquirer › Issuing services: On behalf of continuous innovation in our processing. card issuing financial institutions, services. In our strategic approach we operate a Card Management to technology, we are exploring System (‘CMS’) which plays the solutions such as the ability to role of hosting card information. support financial institutions with This system is used to authorise the issuance of virtual cards to transactions that are initiated by replace physical plastic, and the use the cardholders. of those cards in mobile wallets. › Acquiring services: On behalf of merchants and acquirers, In addition, unlike traditional we operate a merchant switching, the need for real-time management and point-of-sale payments has become increasingly solution that enables merchants encouraged by central banks and to accept card and other forms card schemes, which is another area of digital payment, as well as of development. In acquiring, the support them with settlement market is evolving towards the use of funds. of mobile phones and devices as a means to store and transfer money, › Switching services: In order to which generates additional needs complement all the previously for our customers around security mentioned services, we operate and compliance. We will also a payment switch that serves continue to enhance our existing as a gateway to domestic and platforms to enable an increasingly international card schemes, automated, self-service and digital as well as banks and financial first approach to customer institutions. onboarding. Finally, we are also › Value Added Services: exploring various partnership We operate various different opportunities with technology technology platforms, including: providers and Fintechs, to support an artificial intelligence driven the enablement of next generation fraud management solution; an payment solutions to our customers. industry leading loyalty platform

Network International Holdings Plc Annual Report and Accounts 2020 38

Business Review

Middle East

Middle East revenue Strategic focus › End-to-end payments solutions, with direct acquiring in the UAE and Jordan USD › Scale and leadership, given our 25+ year presence in the region and 198.2 long-term blue chip customer base million › Strategy focused on consolidation, high value customer segments and cross-selling › Customer demand for value added services such as fraud protection, loyalty solutions and data analytics 65.5% › Significant future growth Contribution margin1 opportunity in Saudi Arabia

A selection of our partners

1 This is an alternative performance measure (‘APM’). See note 5 of the consolidated financial statements for APM definitions and the reconciliations of reported figures to APMs.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 39

Our market position Our performance during the year Demand for our N-Genius™ online Our operations in the Middle East are Our performance during the year was gateway also accelerated, with broadly balanced across Merchant significantly impacted by COVID-19, over 1,600 merchant signings Solutions and Issuer Solutions. due to the stringent lockdowns and during the year. Overseen from our head office in merchant closures for much of the Dubai, we have been present in the second quarter. The TPV in Merchant Online strategic case study Middle East since 1994, where our Solutions were particularly impacted See page 22 primary markets are the UAE and by the decline of international tourism Jordan, which are the only regions into the UAE. However, since the In Issuer Solutions, we secured in which we provide direct acquiring easing of lockdown measures across the competitive tender to provide services to merchants. the region, we have seen a gradual exclusive services across five and steady improvement across both countries for CareemPAY. This is a The Middle East continues to show business lines, and exited 2020 with five-year agreement and is a part of a fast-moving transition from cash transactions and TPV from domestic Careem’s digital payments initiative to digital payments. Whilst there transactions showing a recovery enabling its captains to access their has been some short-term negative to 2019 levels. Whilst international daily trip earnings in real-time via a impact on the business, due to related TPV remained low, tourism Visa card. We also renewed our COVID-19, we are seeing evidence into the UAE began to increase Issuer Solutions contract with United that the transition to digital payments towards the end of the year. Arab Bank for a further three years. will speed up as a result of the pandemic shifting consumer Supporting our customers through As a part of our Coronavirus spending behaviours. the lockdowns was a priority and Management Strategy, we paused we implemented a number of our market entry to Saudi Arabia, The majority of our competitors initiatives, including fee reductions linked to the border closures and across the Middle East market are and cash support for a number of supply chain restrictions associated financial institutions, conducting their SME merchants. with the pandemic. We remain own acquiring and issuing payments committed to expanding our activities. Our competitive advantage Our COVID-19 Response presence there, given the significant is based upon our breadth of service See page 6 growth opportunity this will provide offering across the entire payments to our business, and we intend to value chain, pan regional approach, We successfully delivered on a progress with our market entry as long-term local presence and history number of strategic initiatives and soon as border restrictions and of strong relationships. We have the new customer signings. In Merchant supply chains ease. number one market share position in Solutions we signed a number of new Merchant Solutions across the UAE, direct acquiring merchant customers, CEO’s Review and in Issuer Solutions, we look to including: Alexander McQueen, See page 14 capture outsourcing opportunities Bvlgari, Adidas and Luxury Fashion as banks and financial instructions Gulf, the online acquiring for NowNow streamline their business models. (part of Noon Group) and Jimmy Choo. We also signed a partnership Our strategy across the Middle East agreement with online payments is to consolidate our market leading services provider, HyperPay. position across the region and the payments value chain. For the UAE and Jordan, our focus is on delivering end-to-end payment solutions, with direct acquiring a specific focus, targeting high value customer Middle East, an accelerating payments market segments. Cross-selling is also a strategic priority, specifically across our value added services, such as fraud protection, loyalty solutions 21% 252m and data analytics, where we digital payments share population, growing continue to see strong demand. of transactions at 1.7% The Kingdom of Saudi Arabia remains a large new market opportunity for us in the future. 0.52 payment cards per adult

Network International Holdings Plc Annual Report and Accounts 2020 40

Business Review continued

Africa

Africa revenue Strategic focus › Most underpenetrated and fast growing payments market in the world USD › Our competitive strength is rooted in a pan African presence 80.0 across the payments value chain, with an ability to localise our million approach in a highly varied and fragmented market › We are the regional leader with a loyal and developing customer base. Retaining significant headroom to grow with existing 67.9 % customers and win new business Contribution margin1 › With opportunities to further accelerate our growth through the proposed acquisition of DPO, or winning significant outsourcing contracts

A selection of our partners

1 This is an alternative performance measure (‘APM’). See note 5 of the consolidated financial statements for APM definitions and the reconciliations of reported figures to APMs.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 41

Our market position Our performance during the year We are also working towards We provide a full range of Merchant Our performance during the period N-Genius™ gateway implementation and Issuer Solutions services across was impacted by COVID-19, where with bank customers after Africa, with a strong base on the our major markets: Egypt, South certification in three countries. issuing side of the business. We are Africa and Nigeria, all experienced active across more than 40 countries stringent lockdown measures during During the year, we also announced and operate a hub and spoke model the second quarter. The wider our intention to acquire DPO, which to manage customer relationships economic impacts of COVID-19 will provide a significant growth across the continent, often retaining across the continent have also led opportunity. DPO is the largest online local relationship managers, with to a slowing in the outsourcing of commerce platform operating at dedicated operational centres in payments processing activities by scale across Africa, which offers Egypt, Nigeria, South Africa and banks, albeit this is expected to be online and mobile money payments the UAE. short term, with no structural change services to over 59,000 merchants. in this dynamic. The weighting of our The African market is diverse and Africa operations to Issuer Solutions Whilst COVID-19 has resulted in complex, comprising multiple did support the resilience of the some short-term challenges, we regulators, currencies and languages, business, as not all revenue streams are seeing indicators that the shift with numerous local payment are directly linked to underlying from cash to digital payments is schemes. However, Africa continues transaction volumes, but are also accelerating, supporting growth to represent a high growth market at generated from the hosting of card of the digital payments market an early stage of the digital payments portfolios and value added services. and long-term growth potential transition, where our business for our business. opportunity and growth are primarily Despite the challenges associated driven by the move from banks to with COVID-19, we successfully outsource their payments activities. expanded card processing contracts with Fidelity Bank Ghana, and added Network International is the only two million accounts hosted on independent payment solutions our platform for RCS Bank in South provider operating across the Africa. Further successes for our continent, at scale, with a wider Issuer Solutions business included range and quality of services new customers such as Globus Bank compared with local independent in Nigeria and Republic Bank in competitors. Whilst some of the Ghana, and contract renewals from larger international competitors Woolworths Financial Services in occasionally participate, they do not South Africa. In Merchant Solutions, operate at scale across the continent. the launch and rollout of our N-Genius™ POS devices throughout Our growth strategy is centred the continent continued with around four themes: winning new Standard Bank and Orabank across customers across our markets, eight countries, and with Arab growing and expanding relationships African International Bank in Egypt. with existing customers, widening our product solutions and value added services, and developing and enabling alternative payments solutions to support growth across the payments market. Africa, the most underpenetrated payments market

14% 1.3bn digital payments share population, growing of transactions at 2.4% 0.32 cards per adult

Network International Holdings Plc Annual Report and Accounts 2020 42

Chief Financial Officer’s Review

Positive free cash flow generation in a challenging environment

Financial review 2020 20197 USD’000 USD’000 Change Select financials Revenue 284,844 335,379 (15.1)% Underlying EBITDA1 112,561 168,522 (33.2)% Underlying EBITDA margin (excl. share of associate)1 36.1% 47.4% (11.3)pp Profit from continuing operations 5,598 57,317 (90.2)% Underlying net income1 34,664 88,309 (60.7)% Underlying earnings per share (USD cents)1,2 6.7 17.7 (62.1)% Reported earnings per share (USD cents)2,3 1.2 11.5 (89.6)% Underlying free cash flow (underlying FCF)1 51,790 69,232 (25.2)% Cash flow from operating activities 107,500 132,426 (18.8)% Leverage4 2.3x 1.6x 0.7x Leverage (including funds raised for DPO acquisition)4 0.0x 1.6x –

Segmental results Middle East revenue 198,224 244,833 (19.0)% Africa revenue 80,020 90,546 (11.6)% Other revenue5 6,600 – –

Middle East contribution margin1 65.5% 72.9% (740)bps We embraced the Africa contribution margin1 67.9% 70.6% (270)bps challenges of 2020, Business line results taking proactive steps Merchant Solutions revenue 109,415 152,955 (28.5)% to manage our cost base, Issuer Solutions revenue 165,011 177,572 (7.1)% Other revenue5 10,418 4,852 114.7% which minimised the impact to the bottom Key Performance Indicators6 line. Our balance sheet Total Processed Volume (‘TPV’) (USD m) 33,540 43,779 (23.4)% Total number of cards hosted (m) 16.2 14.2 14.1% remains strong with good Total number of transactions (m) 758.1 752.0 0.8% liquidity in the business, and we generated positive free cash flows Updates to the presentation following the issuance of Network’s in a tough environment.” of the financial information first set of accounts as a UK listed In 2020, management has group. Key updates include: Rohit Malhotra undertaken a review of its disclosures Chief Financial Officer including APMs. In undertaking this a) reclassifications, where prior year review, management has sought to comparatives have also been simplify the disclosures and has taken reclassified on the same basis, and; into account evolving best practice from the FRC and ESMA guidance on b) reconciliations and analysis the use of APMs, and feedback from (on the next page). investors and other key stakeholders

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 43

Underlying free cash flow Financial highlights (Underlying FCF)1: In order to enhance the clarity of underlying Revenue Profit from continuing operations cash flow performance; and to aid the comparability of our financial KPIs with peers, we have included USD 284.8m USD 5.6m additional deductions in the (15.1)% (90.2)% definition of underlying FCF1 which are: SDIs affecting EBITDA; and the Underlying EBITDA1 Underlying EPS1,2 share of EBITDA, less dividends received from associate Transguard USD 112.6m USD 6.7cents Cash. Further detail on page 52. (33.2)% (62.1)% In order to aid understanding of the financial information, the table below shows the key financial highlights for the year, without the impact of the a) Reclassifications (prior year › Unrealised foreign exchange above mentioned reclassifications: comparatives have been (gains/losses): arise mainly in 2020 2019 reclassified on the same basis) relation to FX volatility. As these USD’000 USD’000 Mercury Payments Services LLC: is a are not material in the current or Revenue 284,219 334,906 domestic scheme where the Group prior periods, and are expected to Underlying EBITDA 113,820 172,314 retains 70% ownership, and was an remain immaterial in future periods, Underlying net income 50,105 104,764 asset held for sale at 31 December the Group no longer believes it is Underlying FCF 80,873 103,237 2019. The disposal process has been necessary to report separately as Underlying EPS delayed due to the niche nature of the an SDI. Further detail on page 49. (USD cents) 9.6 21.0 asset and disruption as a result of the › Amortisation related to pandemic. As per IFRS requirements, b) Reconciliations and analysis IT transformation: The IT the criteria for recognising Mercury as › A reconciliation of reported transformation was a historical a discontinued operation is no longer operating cash flow to underlying one-off capital investment project 1 satisfied. The financial performance FCF . Further detail on page 53. that included the development of Mercury is now included as part of of a new technology and card › A detailed breakdown and analysis continuing operations. Further details management platform, the Group’s of net interest expenses. Further on page 48. proprietary payment gateway, detail on page 47. and a significant upgrade to Specially Disclosed Items: › A reconciliation of the movement the switching system. Following Underlying EBITDA1 and underlying in net debt from the prior to completion of the project, and in net income1 now include items that current year. Further detail on response to shareholder feedback were previously classified as Specially page 55. regarding the classification of this Disclosed Items (SDIs). item, amortisation related to the › A reconciliation of capital IT transformation has now been expenditure to capital spend in the › Reorganisation, restructuring and classified within underlying consolidated statement of cash settlements: these expenses are depreciation and amortisation. flows. Further detail on page 52. not material in the period, nor are Further detail on page 49. they anticipated to be material in future periods. The Group no longer believes it is necessary to report such items separately, and they are therefore classified within underlying expenses. Further detail on page 49.

1 This is an alternative performance measure (‘APM’). See notes 4 and 5 of the consolidated financial statements for APM definitions and the reconciliations of reported figures to APMs. 2 Average share count has increased as a result of the issuance of 50 million new shares to fund the DPO acquisition. 3 Reported earnings per share is calculated after deducting the non-controlling interest from the profit for the year, in line with the IFRS requirement. 4 Refer to page 54 for the leverage ratio computation and reconciliation of net debt figures to the consolidated financial statements. 5 Other revenue primarily includes revenues recognised relating to the Mastercard strategic partnership. See details on page 44. 6 For KPI definitions, please refer to page 55. 7 There have been reclassifications in financial measures due to the change in presentation of some Specially Disclosed Items (SDIs) and the treatment of Mercury as a continuing operation. Details on pages 48 and 49.

Network International Holdings Plc Annual Report and Accounts 2020 44

Chief Financial Officer’s Review continued

Total revenue with revenues declining by (22.2)%, Contribution1 for the Africa segment Total revenue declined by (15.1)% but saw a progressive recovery declined by (15.1)%, to USD 54.3 (similar on a constant currency across both business lines towards million (2019: USD 64.0 million), basis2) to USD 284.8 million (2019: the end of the year. Contribution1 for with contribution margin1 reducing USD 335.4 million). This now includes the Middle East segment declined by by (270) bps to 67.9%. This was USD 0.6 million of revenue from (27.2)%, to USD 129.9 million (2019: reflective of the revenue reductions Mercury (2019: USD 0.5 million) USD 178.4 million), with contribution on a direct cost base which is largely which was previously classified as margin1 reducing by (740) bps to fixed and remained broadly flat a discontinued operation (further 65.5% (2019: 72.9%). This is reflective compared with the prior year. detail can be found on page 48). of revenue reductions on a largely fixed cost base. Other revenue, not allocated Performance through the period was to an operating segment significantly impacted by COVID-19 Africa The Group’s other revenue, which related lockdowns, and the The Group’s Africa segment operates contributes 2.3% of total revenue, resultant reductions in transactions across 43 countries and contributed is derived from solutions developed throughout our regions, which is 28% of total revenue in the period as part of the Mastercard strategic described in the relevant business (2019: 27%). Africa revenue declined partnership during the period (2019: line sections below. by (11.6)% to USD 80.0 million Nil). The solutions developed in 2020 (2019: USD 90.5 million), which is included the launch of the corporate Revenue results by also largely attributed to COVID-19. card and digital platform (discussed operating segment Performance in Africa was less in the CEO’s Review). These solutions Middle East impacted than the Middle East, linked are developed for use with The Group’s largest segment is the to the weighting of the business customers across both the Middle Middle East, where revenues are towards Issuer Solutions, which East and Africa, and therefore are generated from both Merchant and demonstrates greater resilience not allocated to either of the two Issuer Solutions and represents 70% due to the nature of the revenue operating segments. of total revenue (2019: 73%). During streams. Some of our major markets the period, Middle East revenue in Africa, such as Egypt and Nigeria, Revenue results by declined by (19.0)% to USD 198.2 experienced particularly stringent business line million (2019: USD 244.8 million). lockdown measures in the first half. We serve customers via two core This represented a broadly flat business lines: Merchant Solutions performance through the first This created a number of challenging and Issuer Solutions. quarter, where we experienced dynamics, including: significantly normal trends until mid-February, reduced transaction volumes; Merchant Solutions revenue following which there was an initial limited new card issuance and an Revenue for the Merchant Solutions reduction in Merchant Solutions increased rate of card inactivation business, which comprised 38% of TPV as a result of reduced inbound and cancellation as a result of our total revenue, decreased by (28.5)% tourism to the UAE. From March financial institution clients being to USD 109.4 million (2019: USD onwards, more significant COVID-19 cost conscious; and lower TPV 153.0 million). Total TPV3 declined related impacts were seen across in Merchant Solutions acquirer by (23.4)% to USD 33.5 billion both business lines as a result of processing. As a result H1 2020 Africa (2019: USD 43.8 billion). In Merchant the stringent lockdown measures revenues declined by (10.5)%. During Solutions our revenues are generated implemented across the region. the second half, lockdown measures through fees dependent upon the The impact was less severe in began to ease across a number of value of transactions (‘TPV’3) as Issuer Solutions due to the resilient countries and as we exited the year, well as through value added services nature of the revenue streams and transaction volumes and business and are tightly correlated to the contractual minimums or fixed momentum were improving. Africa underlying value of transactions billings, which are discussed further H2 2020 revenues declined by taking place. Merchant Solutions in the business line section below. (12.6)% y/y, but this was more services are largely focused on our This resulted in H1 2020 Middle East reflective of a strong comparable direct acquiring markets in the UAE revenues declining by (15.3)% y/y. period in the prior year where the and Jordan, with performance over The second half remained impacted final quarter of 2019 saw a revenue the first half period therefore closely by COVID-19 with reduced benefit from a number of financial linked to the lockdown measures in transactions, domestic spending institution customers renewing card place and the related reduction in and lower international tourism, portfolios and requesting additional consumer spending. Through the project based services.

Year-on-year (y/y) growth Q1 Q2 H1 Q3 Q4 H2 FY Total revenue 0% (23)% (12)% (17)% (19)% (18)% (15)% of which Merchant Solutions (8)% (43)% (26)% (30)% (31)% (30)% (28)% of which Issuer Solutions 2% (10)% (4)% (6)% (13)% (10)% (7)%

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 45

second half of the year, as the changes introduced in Jordan during financial institutions, where we have lockdown measures started to ease August, where caps have been placed multi-year contracts in place and a in the region, we saw a gradual and on the fees we charge to merchants; number have contractual minimums. ongoing improvement in domestic and higher non-TPV related revenue Therefore our revenues for this TPV3 which recovered to prior year streams in the prior year. business line are somewhat levels as we exited the period. correlated to underlying transaction International volumes (which are Refunds and chargebacks remained volumes but have a greater resilience largely spends from international low and within expected tolerances due to the card hosting and travellers) remained significantly through the pandemic, with no contractually fixed elements and depressed at (60)% y/y, reflective significant increases in unrecoverable were therefore fairly defensive in the of reduced tourism and business chargebacks or single client losses. face of COVID-19 challenges. Issuer travel into the region, but showed This is representative of our diverse Solutions experienced normal trading promising improvement as we exited merchant sector base and the through January and February but the year where the UAE was one of ongoing steps we have taken to following the implementation of only a few countries open to tourism. manage our risks, including holding lockdown measures across nearly We also continued to see an cash reserves where appropriate. all of our markets towards the end acceleration and growing participation of March, we saw a reduction in of online TPV3, with growth of 53% Issuer Solutions revenue revenues of just over (10)% year- y/y from e-commerce merchants Revenue for Issuer Solutions, which on-year through Q2. As lockdowns (excluding Government and airline comprises 58% of total revenue, started to ease and consumer online TPV3). decreased by (7.1)% to USD 165.0 confidence began to recover across million (2019: USD 177.6 million). In a number of countries, we saw a Take rates4 were slightly lower than Issuer Solutions we generate revenue gradual improvement in transactions the prior year, driven by: the change from three streams: fees linked with and absolute revenues in the in merchant segment mix as a result the number of cards hosted on our business line improved sequentially of the pandemic, where we saw an platform; fees linked to transaction through Q3 and Q4. The two KPIs increased participation of TPV3 from volumes; and fees from value added associated with Issuer Solutions lower margin sectors; regulatory services. Our customers are typically include the number of cards hosted on our platform3, which grew by 14.1% to 16.2 million, and transaction 2020 trends in directly acquired Total Processed Volume (‘TPV’)3 volumes3, which were largely flat at Sector trends in directly processed TPV, (y/y) growth 758.1 million. During the year, we % adjusted the billing mechanism for 40 one of our larger bank customers. 20 Previously, the customer was billed 0 according to the number of cards -20 and accounts hosted but has now -40 moved to billing based on the -60 number of cards hosted and

-80 transactions processed, which is our preferred approach. Without this -100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec change, the number of transactions Total TPV of which Retail of which Supermarkets of which Travel & Entertainment billed would have declined by (8)%, of which Other (Government, Healthcare & Education, Other) which is reflective of COVID-19 impacts, and growth in cards hosted Domestic and International trends in directly processed TPV, (y/y) growth and billed would have been 19%. % Whilst overall we saw growth in the 20 number of cards hosted, this number 0 was significantly boosted by the

-20 addition of 2.1 million prepaid retail cards from RCS Group in South -40 Africa. Aside from this addition, -60 COVID-19 significantly limited new -80 card issuance due to the closure of bank branches, and financial -100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec pressures on banks also led to a Total TPV of which Domestic of which International greater number of inactive card cancellations than would otherwise 1 This is an alternative performance measure (‘APM’). See note 5 of the consolidated financial statements occur in a normal year. for APM definitions and the reconciliations of reported figures to APMs. 2 For constant currency definition, please refer to page 55. 3 For KPI definitions, please refer to page 55. 4 Take rates are an output measure in the Merchant Solutions business, and reflect revenue as a proportion of TPV.

Network International Holdings Plc Annual Report and Accounts 2020 46

Chief Financial Officer’s Review continued

Other revenue not allocated Selling, operating and other reflective of: i) the provision on to a business line expenses: Total selling, operating chargeback and other receivables The Group’s other revenue of USD and other expenses were USD 103.2 (related to POS rental and other 10.4 million, which contributes 4% of million (2019: USD 106.4 million). charges) at USD 1.8 million (2019: total revenue, is mainly derived from This includes SDIs of USD 7.7 million USD 0.3 million). While this has the Mastercard strategic partnership, (2019: USD 12.3 million). increased y/y, our overall provision cash advance fees on withdrawals on chargeback losses and other from ATMs, and foreign exchange Underlying selling, operating and receivables remains very low despite gains / (losses) arising from the other expenses1 grew by 1.5% to USD the pandemic and tough economic Merchant and Issuer Solutions 95.5 million (2019: USD 94.1 million). environment; ii) the provision for business lines. This reflects: our ongoing investments issuer and acquirer processing in cyber security, IT systems and receivables at USD 0.4 million (2019: Expenses compliance; costs associated with the USD 0.2 million). Although some Personnel expenses: Total personnel roll out of our product range; and the payments from customers were expenses were USD 97.0 million stronger uptake of online payment delayed during the pandemic, the (2019: USD 96.7 million). This includes solutions during the year. Third-party overall provision remained low as a SDIs of USD 10.4 million (2019: USD costs were lower y/y reflecting the result of our proactive steps taken 14.5 million). Underlying personnel reduction in volumes and transactions to ensure payments. expenses1 now includes expenses processed through the period. relating to reorganisation, restructuring (Whilst we conduct all core payments Share of EBITDA1 of associate and settlements (USD Nil; 2019: USD 2.1 processing activities in-house, we The Group’s share of EBITDA of million) that were previously classified utilise third-party vendors to provide associate, Transguard Cash, was USD as an SDI. The prior year has also certain components of our value 9.7 million (2019: USD 9.5 million). been reclassified on the same basis. added services such card embossing Transguard Cash provides end to end Adjusting for SDIs, on a like for like and personalisation services, SMS ATM management services in the basis, underlying personnel expenses1 services and 3D secure). We also UAE and business performance was were USD 86.5 million (2019: USD 82.3 saw a reduction in spends across impacted by the lockdown measures million), 5.1% higher when compared discretionary expenses, travel and in place, resulting in reduced volumes with the prior year, reflecting our entertainment, advertising and of ATM replenishments and cash growth in employee headcount, added marketing as a result of our COVID-19 collections from merchant outlets, in the second half of 2019, offset by cost saving measures. which was offset by cost savings and COVID-19 related cost saving measures operational efficiencies, resulting in such as a hiring freeze and reduced Expected credit losses (‘ECL’) the share of EBITDA being marginally payout for annual performance increased to USD 2.2 million (2019: higher than 2019. bonuses and sales incentives. USD 0.5 million). The increase is

Expenses 2020 2019 USD’000 USD’000 Specially Specially Disclosed Underlying Disclosed Underlying Change Reported items results1 (A) Reported2 Items2 results1,2 (B) (A&B) Salaries and allowances 71,965 – 71,965 63,647 (2,572) 61,075 17.8% Bonus and sales incentives 3,787 – 3,787 11,498 – 11,498 (67.1)% Share-based compensation 10,870 (10,445) 425 11,398 (10,679) 719 (40.9)% Terminal and other benefits 10,311 – 10,311 10,201 (1,203) 8,998 14.6% Total personnel expenses 96,933 (10,445) 86,488 96,744 (14,454) 82,290 5.1% Technology and communication costs 44,288 – 44,288 42,358 – 42,358 4.6% Third-party costs 23,518 – 23,518 26,786 – 26,786 (12.2)% Legal and professional fees 22,102 (7,696) 14,406 24,762 (13,987) 10,775 33.7% Provision for expected credit loss 2,183 – 2,183 510 – 510 328.0% Other general and administrative expenses 11,083 – 11,083 12,008 1,651 13,659 18.9% Selling, operating and other expenses 103,174 (7,696) 95,478 106,424 (12,336) 94,088 1.5% Depreciation and amortisation 51,537 (4,204) 47,333 46,817 (4,202) 42,615 11.1% Share of depreciation from associate 3,863 – 3,863 4,222 – 4,222 (8.5)% Total depreciation and amortisation 55,400 (4,204) 51,196 51,039 (4,202) 46,837 9.3% Net Interest expense 21,669 – 21,669 24,844 – 24,844 (12.8)% Write-off of unamortised debt issuance cost 6,721 – 6,721 – – – – Unrealised foreign exchange losses 328 – 328 1,894 – 1,894 (82.7)% Taxes 4,704 – 4,704 6,638 – 6,638 (29.1)%

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 47

Underlying EBITDA1 Underlying EBITDA1 decreased by (33.2)% to USD 112.6 million (2019: USD 168.5 million). This now includes losses from Mercury, which were USD (1.3) million (2019: USD (1.7) million), an asset which was previously classified as a discontinued operation (further detail can be found on page 48).

Underlying EBITDA margin1 (which excludes the Group’s share of its associate, Transguard Cash) was 36.1% (2019: 47.4%). The decrease in underlying EBITDA margin is reflective of COVID-19 related impacts, including: the reduction in revenues for the period; our largely fixed cost base; alongside the full weighting of expenses associated with being a publicly listed business that were only partially reflected in the 2019 comparative period.

The table below presents a reconciliation of the Group’s reported profit from continuing operations to underlying EBITDA1.

2020 20192 USD’000 USD’000 Profit from continuing operations 5,598 57,317 Depreciation and amortisation 51,537 46,817 Write-off of unamortised debt issuance cost 6,721 – Net interest expense 21,669 24,844 Unrealised foreign exchange losses 328 1,894 Taxes 4,704 6,638 Share of depreciation from associate 3,863 4,222 Specially Disclosed Items affecting EBITDA 18,141 26,790 Underlying EBITDA1 112,561 168,522

Depreciation and amortisation The Group’s total depreciation and amortisation (‘D&A’) charge, including the share of depreciation from associate, Transguard Cash, increased by USD 4.4 million to USD 55.4 million (2019: USD 51.0 million). This includes an SDI of USD 4.2 million (2019: USD 4.2 million) for the amortisation of acquired intangibles. The Group’s underlying D&A1 charge grew by 9.3% to USD 51.2 million (2019: USD 46.8 million). The underlying D&A charge now includes USD 14.1 million of amortisation related to the Group’s IT transformation project (2019: USD 10.7 million) which was previously classified as an SDI.

Net interest expense The Group’s reported net interest expense decreased by USD 3.2 million to USD 21.7 million (2019: USD 24.8 million). Net interest expense is composed of: i) interest charged on the drawdown or utilisation of our syndicated term loan facility and revolver facility; ii) interest charged on utilisation of the working capital overdraft facilities (mainly used for funding settlement related balances); iii) amortisation of the costs associated with issuance of the syndicated term loan facility; and iv) IFRS 16 lease financing and other charges. The overall decline in the net interest charge y/y largely reflects lower underlying interest rates, despite higher facility utilisation and lower amortisation of debt issuance costs.

2020 2019 USD’000 USD’000 Comments Interest expense on: Term loan facilitya 12,935 16,800 Average drawdown in 2020: USD 354 million. Average interest rate of 3.4%b. Average drawdown in 2019: USD 325 million, Average interest rate of 5.0%c. 2020 cost also includes c. USD 1 million of commitment fees. Revolving credit facility 1,837 200 Average drawdown in 2020: USD 55 million. Average interest rate of 3.1%. Average drawdown in 2019: USD 5 million. Average interest rate of 3.7% Bank overdrafts for working capital 3,780 2,800 UAE working capital facility contributes c.80% of the associated costs. Average utilisation in 2020 c.USD 75 million, average interest rate 4.1%. Average utilisation in 2019 c.USD 55 million, average interest rate 4.4%. Remaining ~20% of the cost is associated with working capital facilities in Jordan and Egypt. Debt issuance amortisation 1,642 4,504 Amortisation of debt issuance cost costs associated with term loan and revolving credit facility. Other interest expense 1,916 1,833 Relates to interest charges on lease liabilities. Interest income (441) (1,293) Relates to interest income on fixed deposits. Net interest expense 21,669 24,844

1 This is an alternative performance measure (‘APM’). See note 4 of the consolidated financial statements for APM definitions and the reconciliations of reported figures to APMs. 2 There have been certain reclassifications that have also been adjusted in the prior year period, and are discussed in the respective sections of the CFO’s Review. a Syndicated debt facility was refinanced during H1 2020. The current interest rates associated with the new facility are 3/6 month EIBOR +2.45% on the AED tranche and 3/6 month LIBOR +2.70% on the USD tranche. Covenants set at 3.5x net debt: underlying EBITDA. b Opening balance USD 290 million, closing balance USD 375 million (gross of debt issuance costs). c Opening balance USD 334 million, closing balance USD 290 million (gross of debt issuance costs).

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Chief Financial Officer’s Review continued

Unrealised foreign exchange losses Unrealised foreign exchange losses relate to the translation of the Group’s foreign currency denominated assets and liabilities. These were previously classified as an SDI within selling, operating & other expenses but are now reported as a separate line item below ‘profit before interest and tax’. The charge during the year was USD 0.3 million (2019: USD 1.9 million). The prior year has also been reclassified on the same basis.

Write-off of unamortised debt issuance cost This cost relates to the write-off of capitalised debt issuance fees associated with the previous syndicated debt facility, following the re-financing of the facility.

Taxes The Group’s total tax charge during the period was USD 4.7 million (2019: USD 6.6 million) with an underlying effective tax rate of 11.9% (2019: 7.0%). Whilst the applicable tax rates in our operating jurisdictions remain unchanged, the underlying effective tax rate is higher than prior years and is reflective of two factors: i) COVID-19 impact on the business and the associated lower proportion of profits from the UAE where corporate tax is not payable; and ii) the reclassification of amortisation associated with the technology transformation programme into underlying financial performance.

Profit from continuing operations, underlying net income, reported and underlying EPS1 Profit from continuing operations was USD 5.6 million (2019: USD 57.3 million). Underlying net income1 declined by (60.7)% to USD 34.7 million (2019: USD 88.3 million).

The table below presents a reconciliation of the profit from continuing operations to underlying net income1.

2020 20192 USD’000 USD’000 Profit from continuing operations 5,598 57,317 Write-off of unamortised debt issuance cost 6,721 – Specially Disclosed Items affecting EBITDA 18,141 26,790 Specially Disclosed Items affecting net income 4,204 4,202 Underlying net income1 34,664 88,309

Earnings per share During the period, 50,000,000 additional shares were issued as part of the capital raising to fund the proposed acquisition of the DPO Group. This is described in more detail below.

Reported earnings per share from continuing operations is 1.2 USD cents (2019: 11.5 USD cents) and underlying earnings per share (‘EPS’)1 declined by (62.1)% to 6.7 USD cents.

2020 20192 Underlying net income1 (USD’000) 34,664 88,309 No. of shares (’000)* 520,833 500,000 Underlying earnings per share1 (USD cents) 6.7 17.7

* Weighted average number of ordinary shares in issue during the financial period.

Assets previously classified as discontinued operations During the period, losses from discontinued operations were Nil (2019: USD 0.4 million). Prior year losses reflect those from Merchant Solutions services in Bahrain, which have now been closed.

Mercury is a domestic scheme where the Group retains 70% ownership. In 2018, it was classified as a discontinued operation, as part of a strategic decision made to divest the scheme. Management remains committed to the sale of Mercury and is exploring various opportunities. However, the sale process has been delayed due to the niche nature of the asset and disruption to the process as a result of the pandemic. As per IFRS requirements, the criteria for recognising Mercury as a discontinued operation are no longer satisfied and the financial performance of Mercury for 2020 is now included as part of continuing operations. The prior year has also been reclassified on the same basis.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 49

The table below demonstrates the consolidation impact of Mercury on key income statement items:

2020 2019 USD’000 USD’000 Currently Mercury Without Currently Mercury Without presented results consolidation presented results consolidation Revenue 284,844 (625) 284,219 335,379 (473) 334,906 Underlying EBITDA 112,561 1,259 113,820 168,522 1,660 170,182 Underlying net income 34,664 1,346 36,010 88,309 1,694 90,003 Discontinued operations – (1,346) (1,346) – (1,694) (1,694) Net profit 5,598 – 5,598 56,958 – 56,958

Specially Disclosed items (‘SDIs’)1 SDIs are items of income or expenses that have been recognised in a given period which management believes, due to their materiality and being one-off /exceptional in nature, should be disclosed separately to give a more comparable view of the period-to-period underlying financial performance.

SDIs affecting EBITDA during the period were USD 18.1 million (2019: USD 26.8 million) and SDIs affecting net income were USD 4.2 million (2019: USD 4.2 million).

The key SDIs affecting EBITDA in the period were:

Share-based compensation: Includes the charge related to the Management Incentive Award Plan, IPO Cash Bonus, and certain Long Term Incentive Plans awarded to Group-wide eligible employees, all of which are specific payments relating to the Group’s Initial Public Offering (‘IPO’). These charges will decline in 2021, after which they will no longer recur.

M&A and IPO related costs: This includes costs incurred during the period, including those paid for diligence, advisory, and execution in relation to the proposed acquisition of DPO. The prior year period includes one-off expenses related to the IPO. In 2021 such costs are expected to be lower and reflect the remainder of costs expected to be incurred through to completion of the acquisition.

The key SDIs affecting net income in the period were:

Amortisation of acquired intangibles: Amortisation charge on the intangible assets recognised in the Group’s consolidated statement of financial position from the acquisition of Emerging Market Payments Services in 2016.

2019 2020 2019 2019 Previously USD’000 USD’000 Reclassification reported Change (A) (B) USD’000 USD’000 (A&B) Items affecting EBITDA Reorganisation, restructuring and settlements – – 2,132 2,132 – Share-based compensation 10,445 10,679 – 10,679 (2.2)% M&A and IPO related costs 7,696 16,111 – 16,111 (52.2)% Other one-off items – – 1,894 1,894 – Total SDIs affecting EBITDA 18,141 26,790 4,026 30,816 (32.3)%

Items affecting net income Amortisation related to IT transformation – – 10,735 10,735 – Amortisation of acquired intangibles 4,204 4,202 – 4,202 – Total SDIs affecting net income 4,204 4,202 10,735 14,937 – Total specially disclosed items 22,345 30,992 14,761 45,753 (27.9)%

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Chief Financial Officer’s Review continued

Cash flow The Group’s net cash flow from operating activities was USD 107.5 million (2019: USD 132.4 million), a decrease of USD (24.9) million and reflective of the movement in our settlement related balances as well as the decrease in our profit from operations. The Group’s net cash flow from operating activities, before settlement related balances, was USD 88.2 million (2019: USD 92.0 million).

The Group’s net cash outflow from investing activities was USD (49.0) million (2019: USD (75.5) million), reflecting the lower capital expenditure, mainly on account of completion of the IT transformation programme.

The Group’s net cash movement from financing activities was USD 325.2 million (2019: USD (30.0) million) which reflects: i) the issuance of share capital of USD 258.7 million (gross proceeds of USD 264.7 million, net of issuance expenses of USD 6.0 million); ii) net proceeds from the refinancing of syndicated debt facility (USD 79.6 million, net of repayment of the outstanding principal from the prior facility and debt issuance costs of USD 6.7 million for the new facility; iii) purchase of shares under the Long Term Incentive Plan (‘LTIP’) for eligible Group employees (USD (10.4) million); iv) payment on account of lease liabilities (USD (4.6) million); and v) issuance of subsidiary’s capital (Mercury) to non-controlling interest of USD 2.0 million.

2020 20192 USD’000 USD’000 Change Net cash flows from operating activities before settlement related balances 88,214 92,035 (4.2)% Changes in settlement related balances 19,286 40,391 (52.3)% Net cash movement from operating activities 107,500 132,426 (18.8)% Net cash movement from investing activities (49,038) (75,494) (35.0)% Net cash movement from financing activities 325,229 (30,036) –

Working capital The Group’s working capital requirements are broadly classified into the following two categories:

Settlement related working capital Background to settlement related working capital: mainly pertains to the funding cycle associated with the direct merchant acquiring business in the UAE. In line with market practice in the Middle East, which can differ to other global markets, Network International generally remits cash due to its merchant customers on the day following a transaction (‘T+1’) and we receive funds into our bank accounts through the scheme settlement processes on T+2 and from any issuing banks on T+1. Therefore, at any given point in time, there will be around two days of ‘scheme debtor’ receivables pending whereas ‘merchant creditor’ payables are outstanding for only a day, although there are certain circumstances that can cause this timing to vary, which are detailed below. As a result, a working capital requirement arises in order to fund these settlement balances. This funding is provided by our banking partners via an overdraft facility which is continuously settled as schemes remit money to us.

Scheme debtor and merchant creditor balances on our balance sheet are reflective of a snapshot in time at a period end. The balances and their relative movements can be determined by: i) the day of the week on which period end falls. For example, if the period end falls on a weekend, when banks are closed in the US but open in the UAE, this causes an extra day delay (‘T+2/3’) in receipt of funds through the scheme settlement processes; ii) the proportion of merchants who are not settled on a daily basis; iii) TPV in the last few days prior to the period end; and iv) currency mix of TPV and receipt of such funds through the scheme settlement processes.

Restricted cash should be considered separately, and mainly represents settlement amounts withheld for a period of time from merchants, predominantly airlines, where there is a higher risk of potential chargebacks. These withheld balances form part of the merchant creditor balance.

The definition of net debt which is specified in our syndicated lending syndicate documentation excludes the overdraft facilities which are mainly used to facilitate settlement related working capital balances, and restricted cash balances. Settlement related working capital should be considered as very short term in nature, against which the counterparty risk lies with global payment schemes, for consumer transactions which have already been approved by both schemes and issuing banks.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 51

Movement in 2020 settlement related balances: During the period, there was an inflow of USD 19.3 million (2019: USD 40.4 million) in settlement related balances. Scheme debtors declined by USD 19.8 million, (10.7)% y/y, which is reflective of y/y decline in TPV during the last few days of December 2020.

Restricted cash declined marginally. Whilst the restricted cash balance increased through the first half of the year as we prudently withheld merchant funds as collateral to manage chargeback risk through the initial stages of the pandemic, we released funds during the second half as those risks reduced.

Merchant creditors declined by USD 2.0 million. Excluding settlement related balances on hold, merchant creditors were marginally lower compared to 2019. This also reflects TPV processed during the last few days of December, which was lower y/y, but was offset by two factors: i) some merchants are not settled on a daily basis and amounts payable to them increased at the end of the year; and ii) the regulatory changes to acquiring fees in Jordan have also contributed, where there has been a timing delay between the implementation of the regulation and the reduction in our fees, leading to reimbursement delays to some merchants.

Cash inflow/ 2020 20192 (outflow) USD’000 USD’000 USD’ 000 Scheme debtors 165,436 185,268 19,832 Restricted cash 52,550 54,029 1,479 Total merchant creditors (165,142) (167,167) 2,025 Settlement balances on-hold* (51,688) (53,245) (1,557) Other merchant creditors (113,454) (113,922) (468) Settlement related working capital balances 52,844 72,130 19,286

* Represents the off-set balance to restricted cash

Working capital before settlement related balances This represents the amount of capital used by the Group to fund its day-to-day trading operations, other than the settlement related balances as explained above. The overall cash movement in working capital before settlement related balances was USD 19.6 million, largely driven by trade receivables which were lower y/y as a result of the proactive steps taken to ensure timely payment from issuer and acquirer processing customers.

2020 20192 2020 vs. 2019 USD’000 USD’000 USD’000 Trade receivables & chargeback receivables (net of provisions for expected credit losses) 45,874 71,228 25,354 Prepayments and other receivables 22,000 17,268 (4,732) Trade and other payables (127,732) (127,453) 279 (59,858) (38,957) 20,901 Items excluded*: Capex accrual 3,595 Provisions for expected credit losses (refer to page 46) (2,183) Other movements** (2,732) Subtotal (1,320) Working capital before settlement related balances 19,581

* These items are excluded as they are either shown separately in the consolidated statement of cash flows or are non-cash in nature. ** Other movement mainly includes movement in advance taxes paid, share-based compensation liability and interest payables.

Capital expenditure The business has taken a cautious approach to managing capital spending during the period as a result of the COVID-19 pandemic and associated reduction in revenue. This included a pause in our market entry to Saudi Arabia, which was impeded by border closures. Cash inflow/ 2020 20192 (outflow) USD’000 USD’000 USD’000 Total capital expenditure 46,470 84,265 (44.9)% Core capital expenditure: 46,470 45,662 1.8% of which is maintenance capital expenditure1 21,038 25,725 (18.2)% of which is growth capital expenditure1 25,432 19,937 27.6% IT transformation capital expenditure1 – 38,603 (100)%

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Chief Financial Officer’s Review continued

Core capital expenditure consists of both maintenance and growth capex. Maintenance capital expenditure relates to that incurred for additions or improvements that sustain the existing operations of the Group. Growth capital expenditure relates to that associated with delivering business growth, including: onboarding of new customers, expansion of services with existing customers or the development of new product offerings.

Maintenance capital expenditure was USD 21.0 million (2019: USD 25.7 million) and was mainly composed of investment in regard to maintaining and enhancing our technology infrastructure, and capex incurred for the separation of shared services from Emirates NBD.

Growth capital expenditure was USD 25.4 million (2019: USD 19.9 million) and was mainly composed of investment in regard to the procurement of POS terminals for new merchant relationships, product development including those built in partnership with Mastercard and onboarding of new issuer and acquirer processing customers.

Reconciliation of capital expenditure to capital spend in the consolidated statement of cash flows 2020 20192 USD’000 USD’000 Change Total capital expenditure 46,470 84,265 (44.9)% Goods/services received in the current period, but yet to be paid Transformation capital expenditure – (7,296) – Growth and maintenance capex (12,639) (12,959) (2.5)% Goods/services received in prior period, and paid in the current period Transformation capex 7,296 8,711 (16.2)% Growth and maintenance capex 8,937 6,589 35.6% Total consolidated capital expenditure spend (as per consolidated statement of cash flows) 50,064 79,310 (36.9)%

Underlying free cash flow1 Underlying free cash flow1 (underlying FCF) was USD 51.8 million (2019: USD 69.2 million), reflective of the reduction in revenue and operating profit due to the COVID-19 pandemic. Underlying FCF now includes deductions that were not previously included in our definition, including: SDIs affecting EBITDA; and the share of EBITDA for associate Transguard Cash less dividends. 2020 20192 USD’000 USD’000 Change Profit from continuing operations 5,598 57,317 (90.2)% Depreciation and amortisation 51,537 46,817 10.1% Write-off of unamortised debt issuance cost 6,721 – – Net interest expense 21,669 24,844 (12.8)% Unrealised foreign exchange losses 328 1,894 (82.7)% Taxes 4,704 6,638 (29.1)% Share of depreciation of associate 3,863 4,222 (8.5)% Specially Disclosed Items affecting EBITDA 18,141 26,790 (32.3)% Underlying EBITDA1 112,561 168,522 (33.2)% Changes in working capital before settlement related balances 19,581 (9,625) – Taxes paid (6,058) (10,415) (41.8)% Core capital expenditure (46,470) (45,662) 1.8% Specially Disclosed Items affecting EBITDA (18,141) (26,790) (32.3)% Adjustment for share of EBITDA of associate, less dividend (9,683) (6,798) 42.4% Underlying free cash flow1 51,790 69,232 (25.2)%

As per the historical 2019 Annual Reports and Accounts, underlying FCF was stated as USD 103.2 million. For ease of understanding, the table below shows the reconciliation between underlying FCF as stated then, and the new definition as described above.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 53

2020 2019 USD’000 USD’000 Change Underlying free cash flow – as reported above 51,790 69,232 (25.2)% Impact of items not previously included in definition of underlying cash flow: Underlying EBITDA (Mercury and SDI reclassification – as explained earlier) 1,259 3,792 (66.8)% Specially Disclosed Items affecting EBITDA 18,141 26,790 (32.3)% Adjustment for share of EBITDA of associate, less dividends 9,683 6,798 42.4% Changes in working capital before settlement related balances and capital expenditure – related to Mercury (as previously classified as discontinued operation) – (3,375) – Underlying free cash flow – old presentation 80,873 103,237 (21.7)%

Reconciliation of cash flows from operating activities to underlying free cash flow 2020 20192 USD’000 USD’000 Change Net cash inflows from operating activities 107,500 132,426 (18.8)% Less: Cash inflows included in the statutory cash flow but not in the underlying free cash flow Changes in settlement related balances, long-term receivables and other liabilities (19,942) (35,405) (43.7)% Charge for share-based payment (4,070) (1,404) 189.9% Add: Cash outflows included in the statutory cash flow but not in the underlying free cash flow Dividends received from associate – 2,723 – Interest paid 16,985 21,300 (20.3)% Others* (2,213) (4,746) (53.4)% Underlying free cash flow before capital expenditure 98,260 114,894 (14.5)% Core capital expenditure (46,470) (45,662) 1.8% Underlying free cash flow1 51,790 69,232 (25.2)%

* Others include provision for expected credit losses, foreign exchange gains and losses, and loss from discontinued operations.

Capital raise for the acquisition of DPO The Group is working towards the completion of the DPO acquisition. The acquisition was announced on 28 July 2020, and subsequently an equity capital raise was completed to support funding.

The total consideration for DPO is USD 288 million, to be paid as a mixture of cash and equity vendor consideration shares. The vendor consideration portion totals USD 63 million and constitutes a rollover of USD 50 million by Apis Partners (the former private equity owner) and USD 13 million by the co-founders of DPO, into Network International shares. The issuance of these Network shares will be executed at completion. The remainder of the consideration will be funded from the equity capital raise of 50 million shares at a price of 410p, that took place on 28 July 2020 raising gross proceeds of USD 265 million. Of the gross proceeds, USD 6.0 million was used for costs associated with the equity raise which are accounted for in the statement of changes in equity.

Debt The Group’s total debt, including current borrowings, amounted to USD 434.5 million (2019: USD 377.4 million).

2020 2019 USD’000 USD’000 Change Syndicated term loan Principal outstanding 375,000 288,744 29.9% Unamortised debt issuance cost (6,134) (7,814) (21.5)% Sub total 368,866 280,930 31.3% Revolving credit facility 35,000 35,000 0.0% Lease liability 925 1,619 (42.9)% Bank overdraft (for working capital) 29,681 59,895 (50.4)% Total 434,472 377,444 15.1%

Non-current borrowing 369,025 211,783 74.2% Current borrowing 65,447 165,661 (60.5)% Total 434,472 377,444 15.1%

Network International Holdings Plc Annual Report and Accounts 2020 54

Chief Financial Officer’s Review continued

During the year, we refinanced our syndicated debt facility with a group of 16 banks who have a global and regional presence. The refinancing was conducted for the purposes of providing the Group with increased liquidity to fund growth accelerator projects, as well as for general corporate purposes. The new facility carries similar interest rates and the same financial covenants as the prior.

The facility is for USD 525 million and replaced the Group’s USD 350 million term financing facility, which had a drawn down balance of USD 289 million (gross of debt issuance cost of USD 7.8 million) on 31 December 2019. At inception of the new facility, USD 375 million was drawn, of which USD 289 million was used to repay the previous facility, USD 6.7 million used to pay for issuance costs and the remainder held as part of our cash balances for future investment requirements. USD 79 million remains unutilised and is included as cash in the financial statements. The undrawn balance remains available for a period of one year from the date of refinancing which can be further extended subject to approval from the lenders.

The new facility consists of both conventional AED and USD tranches with a coupon of EIBOR plus margin and LIBOR plus margin respectively, together with one USD denominated Islamic finance tranche with a coupon of LIBOR plus margin. The margin is calculated by reference to the leverage (net debt / underlying EBITDA), as per the definition and methodology provided in the financing documents. Financial covenants limits are set to 3.5x net debt: underlying EBITDA. Capital repayments will commence in 2022.

Our leverage ratio3, which represents net debt3 to underlying EBITDA1, is calculated as per the methodology provided in the financing facility agreement with the lending banks. Under these agreements net debt excludes: the overdraft facilities which are mainly used to facilitate settlement related working capital balances; and restricted cash balances which are largely the amounts withheld from merchants for a period of time to cover the risk of chargebacks. EBITDA is measured on an underlying basis over the last 12-month period.

Leverage ratio 2020 20192 USD’000 USD’000 Net debt 252 273,754 Underlying EBITDA1 112,561 168,522 Leverage ratio 0.0 1.6

Leverage ratio – excluding the cash raised to fund the acquisition of DPO 2020 20192 USD’000 USD’000 Net debt 259,655 273,754 Underlying EBITDA1 112,561 168,522 Leverage ratio 2.3 1.6

The table below provides the reconciliation of net debt as per the consolidated financial statements and methodology prescribed in the financing agreement.

2020 20192 Particulars USD’000 USD’000 Non-current borrowings 369,025 211,783 Current borrowings 65,447 165,661 Cash balance (398,781) (45,473) Net debt as per consolidated financial statements 35,691 331,971 Less: Working capital facility overdraft (refer to note 15 of the consolidated financial statements) (29,681) (59,895) Less: Cash balance (share of held for sales assets and associate) (11,422) (3,598) Add: Unamortised debt issuance cost 6,134 7,814 Other adjustments * (470) (2,538) Net debt as per the financing facility agreement – including cash raised for DPO acquisition 252 273,754 Cash generated from equity raise (net of issuance cost) 259,403 – Net debt as per the financing facility agreement – excluding cash raised for DPO acquisition 259,655 273,754

* Other adjustments include restricted cash of the Group’s subsidiaries and adjustment for any temporary end of day excess / short drawdown position of the working capital facility.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 55

The table below reconciles the movement in net debt through the period:

2020 2019 USD’000 USD’000 Opening balance 273,754 278,473 Proceeds from new borrowing Term loan 375,000 – Revolving credit facility 40,000 35,000 Repayment of borrowing Term loan (288,751) (44,918) Revolving credit facility (40,000) – ATM lease liabilities (694) (652) Cash balances (353,308) 14,802 Cash balance of associate (50%) (7,908) 1,089 Others* 2,159 (10,040) Closing balance – including cash raised for DPO acquisition 252 273,754 Cash generated from equity raise (net of issuance cost) 259,403 – Closing balance – excluding cash raised for DPO acquisition 259,655 273,754

* Others mainly include changes in restricted cash from Group subsidiaries, cash balance relating to non-controlling interest of Mercury, Merchant Solutions services in Bahrain and adjustment for any temporary end of day excess / short drawdown position of the working capital facility.

Definitions Constant currency revenue Constant currency revenue is current period revenue recalculated by applying the average exchange rate of the prior period to enable comparability with the prior period revenue. Foreign currency revenue is primarily denominated in Egyptian Pound (‘EGP’). The other non-US backed currencies that have a significant impact on the Group as a result of foreign operations in Nigeria and South Africa are the Nigerian Naira (‘NGN’) and the South African Rand (‘ZAR’) respectively. The table shows the average rate of these currencies per USD for 2020 and 2019.

2020 2019 Average rate Average rate Egyptian Pound (‘EGP’) 15.8 16.8 Nigerian Naira (‘NGN’) 359.4 306.4 South African Rand (‘ZAR’) 15.6 14.4

Key performance indicators To assist in comparing the Group’s financial performance from period-to-period, the Group uses certain key performance indicators which are defined as follows.

Total Processed Volume (‘TPV’) (USD million) TPV is defined as the aggregate monetary volume of purchases processed by the Group within its Merchant Solutions business line.

Number of cards hosted (million) Number of cards hosted is defined as the aggregate number of cards hosted and billed by the Group within its Issuer Solutions business line.

Number of transactions (million) Number of transactions is defined as the aggregate number of transactions processed and billed by the Group within its Issuer Solutions business line.

Rohit Malhotra Chief Financial Officer 7 March 2021

Network International Holdings Plc Annual Report and Accounts 2020 56

Responsible Business

Our commitment to a sustainable and responsible business

2020 key performance highlights

Helping our people thrive… More on page 60 73% 3.8% 54 Group-wide employee Employee turnover rate Nationalities represented engagement score (2019: 7.1%, 2018: 10.2%) across our global workforce (2019: 65%, 2017: 52%) (2019: 53, 2018: 49)

Safeguarding our environment… More on page 66

Joined the Mastercard Priceless c.40,000 14 tonnes Planet Coalition to help address single use plastic-paper cups (approximate) volume of mixed climate change removed from our offices at waste recycled at our office in Egypt the start of 2020

Our contribution to society… More on page 68 AED 5m 140+ 100% pledged in donations and employee volunteers of employees trained discounted fees to support contributed to community on our Code of Conduct UAE-based small businesses development initiatives during the COVID-19 pandemic

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Network International Holdings Plc Annual Report and Accounts 2020 58

Responsible Business continued

Our Our contribution to the UN Sustainable approach Development Goals (‘SDGs’)… Ensure healthy lives and promote well-being for all at all ages We implement a range of measures focused on employee At Network International, well-being, including the provision of private healthcare we are committed to cover in excess of legal requirements in the countries in operating sustainably and which we employ our staff. In 2020, we launched new responsibly in all that we do. counselling and engagement initiatives to support the well-being of our employees amid COVID-19. See page 59. We aim to do business in a way that maintains strong business ethics, respects human rights, supports Achieve gender equality and empower responsible labour practices and safeguards the environment – while all women and girls promoting positive social and We place particular emphasis on promoting gender economic impacts in the markets inclusion and equality across our workforce. In 2020, in which we operate. we continued the implementation of our gender empowerment programme and rolled out our enhanced Beyond this, we recognise that Equality Diversity and Inclusion Policy. sustainable and responsible business See pages 60 to 61. practice is also about:

› Driving the profitable growth of Promote inclusive and sustainable economic our Company to deliver ongoing benefits to our stakeholders – growth, full and productive employment and including employees, shareholders, decent work for all customers and local communities Our digital payment products and services help to increase financial inclusion in communities across the Minimising our risks and maximising › Middle East and Africa. We also work with a number our opportunities, in the context of of host governments to contribute to national financial a changing external environment inclusion initiatives and support the development and enhancement of national payments infrastructure. Indeed, this way of doing business See pages 68 to 69. supports sustainable growth and is very much integrated into our As our approach to responsible business continues to evolve, we plan business model, as our digital to undertake a further analysis and mapping of our positive and negative payments services help support the impacts on the SDGs. This will help us to identify – and focus our efforts financial inclusion of communities on – those Goals where we can make the most meaningful contribution. across the Middle East and Africa.

Group values Our values underpin our r cte activities and support our ra C a u approach to sustainable h s C t o and responsible business. m

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Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 59

How corporate social responsibility is managed Our approach is guided by our overarching Corporate Social Responsibility (‘CSR’) Policy. The Policy commits us to, amongst other things, acting with respect for our employees, communities, customers, suppliers and the environment.

In addition, we are guided by a range of supporting policies and standards (which are described in further detail throughout this section). Most notably, this includes our:

› Code of Conduct › Employee Charter › Equality, Diversity and Inclusion Policy › Health, Safety and Case study Environment (‘HSE’) Policy

Our approach is led by our Group Our response to COVID-19 Chief Human Resources Officer, As the COVID-19 pandemic › The launch of several remote who is a member of the Executive emerged in early 2020, we engagement initiatives to help Management Team. This senior- implemented a range of immediate keep our employees informed level oversight helps ensure that measures to keep our people safe, during the pandemic. This responsible practices are integrated minimise operational disruption included the hosting of virtual into the strategic planning of the and help support vulnerable weekly, Group-wide update organisation, as well as into day-to- businesses in our supply chain. sessions led by our CEO. day business activities. › The rollout of new employee Our response was coordinated As our approach evolves, we aim to well-being initiatives, including through our specially established transition towards the more holistic online awareness sessions COVID-19 Assessment Committee management of our environmental, focused on mental health, as well – led by our CEO and Chief Risk social and governance (‘ESG’) risks, as the commissioning of expert Officer – and implemented with opportunities and impacts. In 2020, third parties to provide remote support from our Group Human we began working with an expert counselling to employees across Resources team. Key measures third party on the development the Group, see page 62. included: of a new, three-year ESG Strategy. › The provision of AED 5 million This includes a gap analysis to › A Group-wide transition to remote in donations and discounted fees benchmark our existing approach working for all employees, often to help small- and medium-sized against prevailing legal requirements, in advance of relevant guidance enterprises (‘SMEs’) in our UAE international sustainability best from our host governments. This supply chain to withstand the practice and evolving stakeholder process was supported by our financial impacts of the expectations. The outputs from already well embedded Flexible pandemic, see page 68. this process will inform the Working Policy, which we development and rollout of the implemented in 2018. In August 2020, we commissioned new strategy in 2021. an independent Employee › The review and enhancement Engagement Survey to help gauge (where necessary) of our private the impact of these measures. This health cover to help ensure all found high levels of satisfaction employees can access testing amongst our workforce and will and/or treatment services, help inform future crisis response as well as online medical planning, see page 65. consultations for non-COVID-19 related health conditions.

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Responsible Business continued

Helping our people thrive

Our people are at the The nature of our business – which Diversity and inclusion heart of our business and involves the provision of market Network International recognises leading digital payment solutions, the value that a diverse workforce are instrumental in the as well as the maintenance of long- brings in terms of driving innovation, delivery of our strategy. standing customer relationships – creativity and the sharing of new In 2020, their dedication means we are highly reliant on our ideas. The global nature of our and commitment helped ability to attract, develop, motivate business means we benefit from and retain high-quality employees. a highly diverse international the business to seamlessly In this context, we continue to focus workforce – with the total number realign priorities in light on making Network International of nationalities represented within of the COVID-19 pandemic an ‘Employer of Choice’ across our our business growing from 49 in and successfully navigate regions. As set out in our Employee 2018 to 54 in 2020. Charter, we are committed to the related operational providing a working environment We aim to ensure that all those and financial challenges. for our people that offers equal participating in our workplace opportunities, competitive terms of are treated with respect, dignity employment, safe working conditions, and fairness. We promote the and effective communication and fair treatment of all employees, Workforce profile in 2020 engagement. In support of this, irrespective of age, gender, race, we also provide our employees national or ethnic origin, religion, with high-quality learning and language or physical ability. This is development opportunities. reflected in our updated Equality 1,309 Diversity and Inclusion Policy, that Total workforce Our ongoing success in this area supports our ongoing alignment to (2019: 1,309) is reflected in our Group-wide best practice standards, and ensures employee turnover rate, which has we continue to seek to exceed UAE: Egypt: been steadily falling over the past legislative requirements. three years, from 10.2% in 2018 to 678 430 3.8% in 2020. (2019: 687) (2019: 422)

Jordan: South Africa: 149 39 (2019: 151) (2019: 37)

Nigeria: 13 (2019: 12)

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 61

The policy also includes additional annual Beacon Award, which country-specific wording to ensure recognises female employees Network International our ongoing compliance with across our regions who embody Employee Charter Emiratisation legislation in the UAE our Group values. as well as Broad-Based Black Economic Empowerment (‘B-BBEE’) We believe that given the right legislation in South Africa. environment and opportunities, a combination of fair and just working Fair Treatment As reflected in our revised policy, conditions and policies designed to Promoting inclusion and we place particular emphasis on minimise work-family conflict, the equal opportunity throughout promoting gender inclusion and promotion and leadership of women our organisation equality across our workforce. In employees will continue to build. particular, female empowerment is Our colleagues are strengthened and not just measured by sheer numbers supported by this compassionate, but by the level of engagement with flexible and family-first approach. women in the workforce and the We also provide access to regional opportunities they have. This includes leading maternity benefits and a Fair Compensation encouraging female participation work culture that accommodates Ensuring fair remuneration from recruitment onwards and typical events in a parent’s life – from and work time standards across every level of the organisation. parent-teacher meetings to a child falling ill. We believe our HR policies Our empowerment initiatives are help us create a balanced, equitable supported throughout the work culture and retain our talented organisation, from the Executive level women employees. and throughout the workforce. Just one example is our ‘This Girl Can’ This approach is reflected in the initiative, that is focused on workplace female engagement scores from Safety and Security gender empowerment and equality, the annual Employee Engagement Providing a safe and high-quality as well as career development and Survey, which were at 77% overall and work environment progression for female employees. higher than the survey average. As This included hosting a series of part of this, we strive to give women engagement sessions led by the same career and pay progression inspirational female leaders from the as men, understanding our gender financial technologies sectors. We pay gap is a further step in promoting have also expanded our networking positive change. In the context of and skills development sessions for our UAE-based employees, which Communication female employees from the UAE to all form the majority of our workforce, Maintaining an ‘open door policy’ of our regions. These sessions, which the mean gender pay gap (total and providing relevant updates are open to all female employees, remuneration) is 17%, whilst the concerning our organisation focus on areas such as pitching / median gender pay gap is 24%. Rather presentation skills, negotiation skills than a case of unequal pay for equal and conflict resolution. Several of work, our pay gap is primarily due our female employees participated to the uneven distribution between in the virtual ‘Women of the Future men and women across the business, In addition, we continue to support Summit’, an external initiative which which is mainly related to the markets opportunities for employees with included a range of interactive in which we operate. This continues to additional needs or disabilities sessions focused on personal and be an area that management and the through the ongoing application of professional development. Our Remuneration Committee are keeping our Equality, Diversity and Inclusion women also celebrated International under review for 2021 and we are Policy. This underpins our efforts Women’s Day across the Group. This taking various measures to grow our to foster an inclusive work culture included the hosting of our second overall female population, particularly and to ensure equal access and fair for senior roles. opportunities for employees with Workforce gender balance additional needs or disabilities. % female % female Male Female (2020) (2019) Finally, in South Africa we are Total workforce 1,012 297 23% 23% proud to have renewed our B-BBEE Board of Directors1 8 3 27% 9% annual certificate with a Level Eight Executive Management Team 7 3 30% 30% compliance rating. Senior managers 49 15 23% 25% (reporting into the Executive Management Team)

1 Gender balance snapshot captured as of January 2021. All other figures refer to end 2020.

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Responsible Business continued

Talent management Our comprehensive approach to employee engagement We apply a holistic approach to talent management, which underpins We encourage open communication › An online forum (‘HR Exchange’), our efforts to attract, develop, between employees and managers which provides a regular platform motivate and retain a creative, on an ongoing basis – and maintain for employees to share their views capable and committed workforce. a range of communication channels and ideas with senior members Our approach is set out in our Talent in support of this. These include: of the Human Resources team. Management Framework (‘TMF’), One example this year saw our which is supported by a robust › A dedicated email address, which first Q&A session on executive performance management system. enables employees to submit pay in the context of the wider The TMF seeks to develop our questions and/or provide workforce reward framework employees across all career stages, feedback directly to our CEO (see page 135) Where whilst helping to ensure they are appropriate, the team follows engaged and consistently perform › A regular series of Group-wide up with relevant functions to to the best of their abilities. This is town hall meetings, led by address some of the issues raised based on four key elements: our CEO, which provides an opportunity for groups of › Annual Employee Engagement › Assessing performance and employees across all grades Surveys to further support potential: All employees are to share their views and ideas two-way communication, subject to regular performance with executive management feedback and idea sharing management and appraisal. between our employees and › A monthly remote strategy Employee performance is management. These also session (‘NI Connect’), led measured using an ‘Objectives, inform the development of by our CEO and Executive Goals, Strategies & Measures’ new management actions Management Team, in which (‘OGSM’) framework, and their to help address employee key progress against our potential is understood by their concerns and respond to strategy is communicated attributes and likely behaviours their ideas, see page 63 to senior managers › Creating talent pools: Based on their potential and performance, all employees are assessed using a ‘9-Box Talent Grid’. This helps Employee engagement › ‘Virtual Travel Diary’, an online us to identify talent pools based In 2020, we implemented several networking initiative for employees on employees’ current and new initiatives to help enhance to share their previous travel potential contribution to the communication with our workforce experiences and keep in touch organisation and supports the in the context of increased whilst working remotely rapid development of our high- uncertainty relating to COVID-19. › We commissioned a leading potential individuals, including This included the launch of: external engagement company through the implementation of to conduct an independent survey tailored coaching and mentoring › Monthly virtual engagement sessions in order to gauge employee interventions led by our Executive Management satisfaction regarding our response Team to provide updates on the › Succession planning: We apply to COVID-19 – and to inform future performance of the business and a structured succession planning management actions, see page 65 our ongoing response to the virus process, focused on the high- We also reviewed and enhanced our potential employees identified › Video messaging from our CEO engagement approach to ensure through the 9-Box Talent Grid, to and Chairman to help address we continue to meet the employee help ensure we develop and retain employee concerns over global engagement provisions of the UK the necessary skills to deliver on developments relating to the virus Corporate Governance Code. This our Group strategic objectives › A virtual ‘Talk to HR’ forum to help included a Board-level review of our › Employee development planning: answer employee questions on engagement activities and overall We implement structured learning related human resources issues Engagement Framework to confirm and development plans that alignment. In addition, we launched › ‘NetworkFlix’, a social platform to are aligned to – and support – several actions to further support enable managers and employees our Group strategic objectives Board-level engagement. This to share their experiences and (see ‘Learning and development’ included a Group-wide virtual achievements through home videos on page 64) training session on our Remuneration Framework led by the Chair of the Remuneration Committee.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 63

Group-wide employee Case study benefits Responding to our Employee Engagement Survey We provide a range of workplace benefits to our employees. In our 2020 Employee Engagement have informed the development These include: Survey, Network International of appropriate management achieved an overall engagement actions – each of which will be › Competitive base salaries and score of 73% (2019: 65%), based overseen by an employee-led bonuses for the achievement on a participation rate of 83% focus group. Key planned actions of performance targets (2019: 72%). This reflected for 2021 will focus on learning improved scoring across most and development, employee › Extended maternity and of the key areas surveyed – and recognition, and enhanced paternity leave (in excess of placed Network International collaboration between different what is required by law across ahead of many of the international functions of the organisation. the numerous countries technology companies and regional We will undertake a further where we employ our staff) financial services companies who Employee Engagement Survey › Healthcare cover (in excess of are benchmarked as part of the in 2021 to continue building our what is required by law across process. Key areas of strength understanding of employee views, the numerous countries where included brand loyalty, diversity and to monitor the progress of we employ our staff) and inclusion, and performance these related management actions. management. Notably high › Life insurance cover engagement levels amongst female › Competitive pension plans employees was an additional area of strength. The survey also highlighted areas for potential 73% improvement and these findings overall engagement score

In 2020, we expanded our Long Term Incentive Plan (‘LTIP’) – which was launched for the Executive Management Team in 2019 – to around 80 high potential senior managers. It includes the awarding of stock options for the achievement of financial and non-financial targets.

We also run regular awards programmes to recognise high performing employees. This includes our ‘Group Star of the Month’ programme, which recognises one employee and one team from across the Company that have gone above and beyond their regular responsibilities to demonstrate outstanding behaviour, performance or commitment. Monthly winners receive a prize and are publicly recognised in a Group-wide email communication.

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Responsible Business continued

Learning and development We are committed to supporting Case study the development of our employees’ ‘hard’ and ‘soft’ professional skills, Participating in the Visa Global Challenge to the benefit of both the individual and the Company. In 2020, 20 teams from Network develop a simulated card and International participated in the payments business. The challenge Our L&D approach is based on Visa Global Challenge – an provides participants with practical the ‘70-20-10 Learning Model’. interactive, global competition that experience in business strategy This focuses on: challenges participants through a and teamwork, whilst offering range of simulation-based learning valuable strategic insight into the › 70% ‘on-the-job’: L&D through scenarios. As part of the challenge, payments industry. Three of our day-to-day tasks, enhanced teams of four from a range of teams finished in the top 10 of the responsibilities, challenges and mini global organisations competed competition, out of 178 teams who collaborative role-based projects over a period of 10 weeks to competed globally. › 20% mentorship: L&D through guidance and advice from more experienced mentors. In 2020, 20 teams from Network International 21 employees from our talent participated in the Challenge pools benefited as mentees under this programme › 10% formal training programmes: L&D through structured external and/or in-house formal training. This includes online programmes across a range of technical, functional and operational modules – as well as mandatory compliance training Our approach is underpinned by a Additional learning and development Health, safety and well-being robust L&D architecture that helps initiatives launched during the year We are fully committed to delivering support the ongoing implementation included: a healthy, safe, productive and stable of a consistent, responsive and working environment for all our centrally managed learning model. › Our ‘Network Café’ initiative, a employees – as well as supporting This is based on, amongst other inputs: series of online training sessions in the broader health and well-being which employees from across the of our employees. › Feedback from our annual OGSM Group provide one-hour lunchtime employee reviews training to colleagues with a focus Our Health, Safety and Environment › An annual, Group-wide ‘Training- on professional and personal (‘HSE’) Policy guides our HSE Needs-Analysis’ process development. Training topics were management activities, and sets out informed by a Group-wide survey our overarching commitments to: › Feedback from employee surveys of employee interests and skills In 2020, we rolled out a new L&D requirements › Comply with legal and regulatory Charter in response to employee HSE requirements › Our ‘Network Learning Forum’, a feedback from our 2019 Engagement Group-wide email-based learning › Provide a safe environment for our Survey. The new Charter helps to programme providing training in staff, customers and third parties further define our development self-management skills, public vision, objectives, and related roles › Develop and embed a safety speaking, communication and the and responsibilities. culture that supports health, setting of ‘SMART’ goals, amongst safety and well-being other topics In the context of COVID-19, all › Reduce HSE risks and hazards mandatory training sessions, Employee training 2020 2019 2018 on an ongoing basis including induction and policy Number of refresher sessions, were transformed staff trained 1,309 1,309 573 into e-learning sessions. Number of training hours 11,879 21,040 4,697 Training coverage for the Group 100% 100% 75%

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 65

Our policy commitments are Following the onset of COVID-19, › The rollout of regular, Group-wide implemented through our HSE we shifted the emphasis of the communications to raise awareness Management System. This is programme to help support around preventative measures / supported by a comprehensive employee well-being in the context common symptoms, and to governance structure that includes of the virus and the shift to remote provide key travel updates the following roles and responsibilities: working, see page 59. This included: › Group-wide, remote mental health awareness and stress › The Group Risk Committee is › The commissioning of International management sessions to support responsible for ensuring that the SOS to provide telephone-based employee well-being during the adequate framework, governance mental well-being counselling to COVID-19 pandemic and resources are in place to employees working remotely implement and maintain an across the Group › The hosting of a series of online effective management system wellness sessions focused on › The establishment of a ‘COVID-19 yoga, mental well-being and › The Group Safety Committee is hotline’ staffed by our HR team to stress management responsible for overseeing HSE address employee questions relating activities on an ongoing basis. to preventive measures, travel This includes the provision of restrictions, health insurance and guidance to help enhance the how to access medical assistance management system › The Health and Safety team implements the management system and monitors and measures its performance on a regular basis › Group Internal Audit evaluates through periodic reviews whether the management system is effectively implemented and maintained Our HSE Policy and HSE Management System also cover our environmental impacts. For more information on environmental stewardship at Network International, see ‘Safeguarding our environment’, page 66. Case study

In early 2020, we continued to Measuring our response to COVID-19 implement our Employee Wellness Programme. This included the In August 2020, Network The survey recorded an overall rollout of: International commissioned a satisfaction score of 89%, with leading external engagement key areas of strength including: › Group-wide, remote nutrition and company, Kincentric, to conduct diabetes awareness raising sessions an independent employee survey › Senior leadership communication focused on our response to and response: 94% › Dental checkups for employees COVID-19. The survey aimed in the UAE › Level of Company support for to gauge levels of workforce employee wellness, health and › Consultations with General satisfaction with our response – safety: 92% Practitioners for employees in and to inform future management the UAE and Egypt actions. In total, over 1,000 › Virtual work effectiveness: 89% employees (representing 83% › Influenza vaccinations, vision › Manager concern and of our workforce) participated tests and general heath checkups connection: 87% across the Group. for employees in Egypt › Company approach to helping employees manage stress relating to COVID-19: 80% The findings will also help inform 89% future crisis response planning at overall satisfaction score Network International.

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Responsible Business continued

Safeguarding our environment

We are committed to the implementation of environmentally responsible practices across our business.

Our HSE Policy sets out our Energy and carbon emissions overarching commitments to minimise our impact on the Carbon emissions (2020) This is the first year that we have environment through pollution measured and reported on our prevention; reduce our consumption Scope 1: nil annual direct (Scope 1) and of natural resources as well as our indirect (Scope 2) greenhouse gas emissions; and to recycle our waste. Scope 2: 919 tons of CO2 GHG emissions, as part of our For more information on our HSE obligations as a listed company Management System, see ‘Health, Carbon intensity on the London Stock Exchange. safety and well-being’ on page 64. (CO2 emissions per We will continue to monitor our emissions in future years to inform In addition, we seek to minimise employee): 0.8 tons CO2 per employee p.a. trend analysis, as well as future environmental impacts beyond our emissions reduction measures.* immediate operations. This includes leveraging our payment platforms to help our merchants reduce their *Carbon emissions methodology and assumptions volume of printed receipts (page 67), Network International has reviewed – Based on the methodology as well as working with partners in its sources of carbon emission and adopted, Network International’s our wider value chain to help address has concluded the following: Scope 2 emissions are climate change (page 67). 919 tons of CO . › Scope 1: Network International’s 2 office buildings & cooling systems – NOTE 1: Nigeria and South Africa Waste and recycling are not dependent on gas / oil employees were in the process The majority of the waste we create consumption resulting in ‘nil’ of relocating premises in 2020. comes from end-of-life IT equipment Scope 1 emissions. Network Due to the limited number of and other office-related waste. The International does own 11 vehicles employees (<50 in total) operating closure of our global offices amidst which have no material impact in out of these locations and the the COVID-19 pandemic has resulted 2020 due to the work from home lockdown due to COVID-19, the in the temporary reduction in the arrangements put in place for impact in 2020 for these regions a significant part of the year. would be negligible and hence volume of our office-based waste. have not been considered. › Scope 2: Network International In early 2020, we completed an conducted a preliminary assessment – NOTE 2: Premises with electricity initiative to replace all single use of power consumption in offices costs bundled with the lease / plastic-paper cups with reusable across the Group & standardised rental contracts have also not the consumption units for been considered due to inability cups across our global offices and reporting purposes (in KwHr). to decouple the electricity canteens. This has resulted in consumption from rental. approximately 40,000 single use – The computation methodology cups being removed from our applied for carbon emissions is the › Network International’s Intensity business on an annual basis. product of ‘electricity consumption Ratio computation is an extension in KwHr) for the region’ & ‘the of the GHG methodology wherein Emission Factor for the region’. the Scope 2 emissions are divided We also continued to implement The resultants are aggregated to by the number of employees in a range of initiatives under our arrive at the Group level emission. the respective offices to arrive Group-wide recycling programme. at the Group level intensity ratio This included: – Emission factors for the in CO emissions per head. regions have been referred to 2 A partnership with a third-party from the IEA.org – Emission › None (0%) of our carbon emissions › factors aggregator report. or energy consumption come from waste management company at the UK or the offshore area of the UK. our Egypt office, which resulted in the recycling of approximately 14 tonnes of mixed waste

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 67

› The installation of new recycling units to increase the recycling of our Case study office waste in the UAE and Egypt Beyond our immediate operations, Helping address climate change through we also work to reduce waste within the Priceless Planet Coalition our supply chain. For example, our payment acceptance terminals allow In October 2020, Network Focus will be on areas with the merchant customers to reduce the International joined the Mastercard highest potential for positive size and volume of paper receipts. Priceless Planet Coalition. The climate, community development This has resulted in up to a 40% initiative brings together companies, and biodiversity impacts. Three reduction in receipt rolls for some merchants, banks, cities and locations have been identified in of our merchants in the UAE. consumers from across the globe Kenya, Brazil and Australia, with to take action on climate change. tree planting planned to start in The office-based, technology-enabled The goal is to plant 100 million 2021. Beyond this, the project will nature of our business means the trees by 2025 and to re-grow be expanded to other locations. forests in regions of high global majority of our CO2 emissions relate to energy consumption at our offices need, as a way of capturing CO2. Network International will act as (e.g. from lighting, air conditioning the ‘preferred acquirer’ for Priceless and computer systems). Forestation efforts will be Planet Coalition and will provide supported by corporate and payment processing services free consumer donations, and led by of charge for any digital donations Group-wide electricity consumption Conservation International and made in the UAE. 1,954,132 Kwh the World Resources Institute.

Energy consumption at our offices has been temporarily reduced by the global transition of our workforce to remote working. Nonetheless, we are still taking small steps to reduce our energy consumption and minimise the 100m trees to be planted by 2025 carbon footprint of our offices. For example, in early 2020 we installed motion sensor activated lighting systems at our office in the UAE. In addition, we installed sensor activated taps at offices across the Group to help reduce water wastage and to support COVID-19 prevention measures. We hope to benefit from the full impact of these measures once we return to office-based working.

The COVID-19 pandemic has also significantly reduced the amount of business travel undertaken by our employees. Prior to the pandemic, we already used video conferencing as an alternative to business travel, where possible, in line with the requirements of our Travel Policy.

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Responsible Business continued

Our contribution to society

Network International is committed to having a positive impact upon our host societies. Our most important social impacts are enabled through our business model.

As a digital payments provider throughout our regions, our business Case study activities support and promote the financial inclusion of communities. In Supporting SMEs through COVID-19 addition, our support for community development projects helps us to While small- and medium-sized smallest merchants who are deliver further social and economic enterprises (‘SMEs’) are key in particular need of additional benefits at the local level; whilst contributors to the UAE’s economy, financial support the economic value we generate they are highly vulnerable to the › The waiving of merchant service is distributed to our investors and financial impacts of COVID-19. fees for three months for new employees, amongst other key SME users of our N-Genius™ stakeholders. In March 2020, Network online payment platform – to help International pledged the small businesses to transition In this context, we are also fully equivalent of AED 5 million in cash from physical to online sales committed to fulfilling our obligations donations and discounted fees towards – and maintaining the trust to help ease the financial burden › The waiving of minimum of – all our stakeholders. This includes on SMEs during the pandemic. transaction fees for some respecting internationally recognised merchant clients for three human rights and acting with integrity Our pledge included the following months to help further reduce and honesty in all that we do. measures: cost pressures

Supporting financial inclusion › Cash donations to help provide Through these ongoing efforts, The nature of our products and liquidity for our most severely we hope to play an important services, which are focused on impacted SME clients. We role in supporting our SME clients digitising and enhancing payment prioritised long-standing clients, through the crisis. services, help to lower transaction with an emphasis on the costs and increase financial inclusion in communities across the Middle East and Africa. Furthermore, we work with a number of our host governments to contribute to national financial inclusion initiatives and support the development and enhancement of national payments infrastructure. This includes:

› Ongoing participation in the ‘Smart Dubai’ initiative to help support the acceleration of digital payments in the Emirates › Ongoing participation in the Government of Egypt’s ‘Meeza’ national payment programme which helps Egyptian citizens receive and make payments electronically, pay bills via ATMs and at government departments, and access state benefits and government subsidies

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 69

Case study Network International Society Satisfaction Survey

During the year, we conducted our Based on the outputs of the survey, sixth Society Satisfaction Survey. we identified several opportunities to We conduct the survey on an annual help further enhance our contribution basis to measure awareness and to society. This included the perceptions of our Group among development of a new recycling UAE residents. This includes a focus programme with an external partner on perceptions around the ethical in Egypt, see page 67, as well the integrity of our business as well as distribution of food, clothes and our approach to CSR. amenities to communities across our regions of operation which have been The 2020 survey involved 212 disproportionately impacted by participants (2019: 198) and COVID-19. We began implementation recorded a Society Satisfaction of these initiatives in 2020. Index (‘SSI’) score of 75% (2019: 65%), exceeding our target score of 70%. The SSI is a measure of how an organisation is perceived 212 by its stakeholders. participants took part in the 2020 Social Satisfaction Survey

Community development Key examples focused on addressing Further examples focused on We are committed to maximising our the social and economic impact of addressing broader societal positive impacts on local communities. COVID-19 include: challenges include: We support the philanthropic efforts of our employees to help drive a › Employees donating blood to help › Employees in the UAE volunteering ‘bottom-up’, employee-led approach the medical community respond through the Special Needs Future to community development across to COVID-19 Development Center to support the Group. Most volunteering takes 40 children with special needs › Employees in Jordan volunteering place during working hours, and to deliver food parcels to 100 › Employees in Egypt volunteering employees are given the opportunity families through the NAUA through the Land of Love to suggest volunteering-led initiatives Foundation Association to support adults for inclusion in the Company’s annual with special needs CSR programme. › Employees in the UAE volunteering with the Beit Al Khair Society to › Employees in South Africa taking During lockdown, over 140 distribute meals, benefitting 1,060 part in the ‘Women for Change employees volunteered to support local community members who – Virtual Race’ to raise awareness community development initiatives have been severely impacted by of violence against women across the Group. the pandemic › Employees in South Africa taking part in food distribution to vulnerable groups, in collaboration with the Central Hockey Club In addition, Network International continued to make donations to the Rashid Center for People of Determination and the Sheikh Mohammed Centre for Cultural and Social Understanding in the UAE.

Network International Holdings Plc Annual Report and Accounts 2020 70

Responsible Business continued

Business ethics In 2020, we strengthened our Network International operates a Network International is committed to compliance procedures through zero-tolerance approach to modern applying the highest ethical standards. the launch of a confidential and slavery and human trafficking. We This commitment is established in our anonymous 24-hour whistleblowing do not employ bonded, forced or Code of Conduct,3 which requires all hotline and related online reporting compulsory labour and would never our employees and any third parties channel, operated by an independent knowingly support or do business acting on behalf of the Group to act third party. Employees can also with any organisation involved in ethically and in full compliance with all continue to raise concerns via a these issues. Based on the nature of applicable laws and regulations. All direct telephone line to our Chief our business and the goods and employees receive annual refresher Risk Officer and Group Company services we procure from third-party training on the Code of Conduct. Secretary. These channels enable suppliers – the majority of whom are employees to safely raise concerns in the technology and/or payments Our approach to business ethics about actual or potential fraud, sectors – we assess there to be a low is further set out in a range of malpractice, or wrongdoing without risk of modern slavery and human supporting policies (which are fear of reprisal. In addition to trafficking in our supply chains. available to employees, not published business ethics, these channels externally). This includes our: accept concerns related to any We assess this risk on an ongoing other matter that employees feel basis through due diligence › Anti-Bribery and is unacceptable in the workplace. undertaken on all suppliers prior Anti-Corruption Policy to engagement – and, periodically, Our approach to business ethics throughout the contract term – › Sanctions Policy is described in more detail in the as set out in our Group Procurement › Anti-Money Laundering / Corporate Governance Report Policy and Vendor Code of Conduct. Counter Terrorism Funding on page 100. We also undertake periodic onsite (‘AML/CTF’) Policy audits on a number of suppliers. Human rights Finally, we include standard terms › Conflicts of Interest Policy Network International is committed in all our contracts to reinforce our › Market Abuse Regulation to respecting fundamental human opposition to modern slavery and (‘MAR’) Manual rights and labour standards. Whilst human trafficking. we do not have a standalone human › Whistleblower’s Policy rights policy, we have implemented In future, we plan to further enhance a range of policies that support our standard terms and conditions these commitments. These include with suppliers to support our our Code of Conduct and ongoing alignment with the UK Whistleblower’s Policy. Modern Slavery Act. We also plan to conduct related awareness In addition, our human rights training for employees involved requirements are embedded in supply chain management. within our Group Procurement Policy, as well as our Vendor Code of For further details, see the link to Conduct. These require suppliers to our Modern Slavery Statement at: demonstrate that they provide safe network.ae/en/contents/view/ working conditions, treat workers modern-slavery-act. with dignity and respect and apply ethical and legal employment practices. Violations of the Vendor Code of Conduct will lead to the termination of our relationship with a supplier.

3 Network International, Code of Conduct: https://investors.networkinternational.ae/media/1231/networkinternational-code-of-conduct-mar2020.pdf.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 71

Non-Financial Information Statement

The table and cross-references below aim to help stakeholders better understand our approach to key non-financial matters.

Reporting Example internal policies Page reference requirement and standards

Environmental matters Corporate Social Responsibility (‘CSR’) Policy 59 Health, Safety and Environment (‘HSE’) Policy 64

Climate change CSR Policy 59 HSE Policy 64

Employees Code of Conduct 100 Employee Charter 61 HSE Policy 64 Equality, Diversity and Inclusion Policy 60 Learning & Development (‘L&D’) Charter 64 Employee Engagement Survey 63

Human rights Code of Conduct 100 Whistleblower Policy 101 Group Procurement Policy 70 Vendor Code of Conduct 70 Modern Slavery Statement 70

Social matters CSR Policy 59

Anti-corruption Code of Conduct 100 and anti-bribery Anti-Bribery and Anti-Corruption Policy 70 Sanctions Policy 70 Anti-Money Laundering / Counter Terrorism Funding (‘AML/CTF’) Policy 70 Conflicts of Interest Policy 70 Market Abuse Regulation (‘MAR’) Manual 70 Whistleblower’s Policy 101

Business model N/A 10

Principal risks Enterprise Risk Management Framework 73 and uncertainties

Non-financial key N/A 56, throughout performance indicators

Network International Holdings Plc Annual Report and Accounts 2020 72

Principal Risks and Uncertainties

Introduction from the Chief Risk Officer and Group Company Secretary

Overview our expansion plans for the We have continued to make further Saudi Arabia and Africa markets progress in maturing our approach alongside rapid technological to risk management, building on developments in the payments the firm foundations we laid in 2019. industry present shifting demands For example, we have embedded a on our operational and technology strong culture of risk management capabilities. All of these factors which supports good governance continue to expose our business and sound risk management to multiple challenges, risks and practices across the Group. We uncertainties. Consequently, the operate in dynamic markets across effective and efficient identification the Middle East and Africa which and management of these risks is can be impacted by a multitude of key to the successful achievement geopolitical events and regulatory of our strategic objectives. changes. Therefore, our continued Jay Razzaq growth in the region, together with Chief Risk Officer and Group Company Secretary

COVID-19 › Our robust Business Continuity We continue to evolve programme ensured that the The speed and impact of the Group was able to swiftly transition our risk profile as the COVID-19 pandemic on people and to remote working across all our business grows and we commerce around the world was markets while maintaining services unprecedented. On page 6 of this and resiliency at high levels. expand our geographical report, we explain our strategic footprint in the Middle East response to mitigate the impacts › We also re-evaluated our of the pandemic on our business: control framework, assessing and Africa region. We have the extent to which it could › Working for our customers; also made considerable be adversely impacted in the progress in embedding › Balancing short-term disruption short term in order to maintain with a long-term focus; operational resiliency. our Enterprise Risk › Maintaining a robust › A temporary principal risk relating Management Framework financial position; to COVID-19 was also created to (‘ERMF’) across all three monitor the Group’s response to › Looking after our people; and lines of defence. Our ERMF the pandemic against additional › Pulling together through key risk indicators which were used and governance model are strength of leadership. by management to assess risks, aligned with our operating in addition to being reported to › With the onset of the pandemic, we the Audit and Risk Committee. model which helps us established a COVID-19 Assessment in managing risks in the Team, chaired by the Group CEO, to rapidly assess the emerging changing economic, situation and its impacts on our political and market business and our colleagues. environments.”

Jay Razzaq Chief Risk Officer and Group Company Secretary

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 73

ERMF Credit risk › We considered how each of The Group continues to make good these scenarios was impacted progress in further embedding the With the onset of the COVID-19 in different segments within pandemic at the end of Q1 ’20, we ERMF, having established a clear risk our portfolio against actual governance model utilising the three experienced a significant impact unrecoverable chargeback losses. to trading, linked to the social lines of defence model to ensure distancing and lockdown measures › Increased refund requests arising effective risk management, oversight implemented across nearly all of the from cancellations of bookings from and assurance. In addition, the ERM markets in which we operate. This our airlines, travel agencies, tour Committee, which was constituted impacted a number of our merchants’ operators and hotels merchants in 2020 with representatives from ability to trade. We rapidly took steps were closely monitored and the management team and Group to assess the impact of our potential recovered from those merchants. Internal Audit, has established regular loss rates, particularly from those › As a result of our proactive risk meetings to monitor and review merchants that were offering delayed mitigating actions and prudent delivery of products and services. various enterprise level risks within risk management approach our the Group, to provide effective › We formulated three stress chargeback losses were only oversight of the ERMF and to report scenarios focusing on certain 0.003% of Total Processing its findings to support the work delayed delivery merchants Volume at the end of 2020. and their expected chargeback of the Audit and Risk Committee. volumes up to June 2020, Examples of the steps we have taken December 2020 and June 2021. More about credit risk to embed our ERMF and evidence of See page 86 a strong risk culture are given within this section on Principal Risks and Uncertainties (from pages 76 to 78).

Regulatory compliance – Keeping pace with regulatory changes We have a robust framework in place UAE: Ghana: to ensure compliance with changes › The UAE Federal law on relaxation › The new Payment Systems and in the law and we are committed to of restrictions on foreign ownership of Services Law requires the Group adhering to the highest regulatory business in UAE, which may open the to set up a local Ghanaian company standards in our markets of operation. possibility of reviewing the sponsorship with a 30% local shareholding partner, to be able to continue The Group is subject to an increasing structure for the Group’s UAE business. servicing Ghanaian customers. array of regulations that affect the › The Central Bank also invited payments industry in jurisdictions in comments on their proposed Retail South Africa: which our products and services are Payments Services Regulation › A new Protection of Personal used by our merchant and financial with an intention to finalise which Information Act of South Africa institutions customers. In response is proposed for implementation for came into effect in 2020 to regulate to this the Group performs timely 2021; the Group’s UAE business would the processing of personal data by reviews of new and emerging laws be governed by these regulations. data controllers and data processors. and regulations to assess the impact on the Group’s overall risk profile. Saudi Arabia: Regulatory change will remain a The assessments are reviewed by › The Saudi Arabia Monetary key area of focus in the year ahead our Regulatory & Privacy Change Authority issued a new payments to ensure we continue to identify Management Committee who regulation under which a payment and assess changes in a timely provide direction to Group on the service provider licence is required manner and effectively embed new impact, implementation requirements to be obtained by the Group’s requirements into our business and the ongoing monitoring of Saudi Arabian entity to provide operations. The Group will ensure we compliance with laws and regulations. payments services in Saudi Arabia. are organisationally aligned to assess and where applicable meet all new › In the Middle East and Africa we Egypt: regulatory obligations as they emerge. have seen several examples of › The Egypt Central Bank enacted new legislative and regulatory a new Banking law in 2020, under requirements that have been or which the Egyptian subsidiary will are expected to be introduced be required to obtain a payment More about our regulatory compliance in the near future. These include: system operator licence. See page 83

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Principal Risks and Uncertainties continued

COVID-19 On pages 6 and 7 of this Annual Cyber security – Combatting evolving cyber risks Report, we explain the key priorities and continuing to invest in security enhancements of our Coronavirus Management Strategy in rapid response to The security of our systems and the mitigate the impact of COVID-19 data we are trusted to manage is of on our business, protecting our utmost importance to us. customers, our people and our › Cyber attacks are undeniably a financial position. For example, we global threat for businesses and implemented a number of practical individuals with the frequency and support measures for customers sophistication of attacks increasing across the business and our every year. Governments and programme of cash support to regulators across our markets are increasingly recognising cybersecurity micro-SMEs which was very well as a systemic risk resulting in the The Group continuously uses an received. We approached this rapidly emergence of regulations and › intelligence driven defence in depth emerging risk by establishing a standards to combat the emerging approach for early detection and COVID-19 Assessment Team to cyber threats. The Group has invested response to cyber threats. monitor the situation, develop our in and continuously enhanced the Coronavirus Management Strategy security capabilities to combat and › We continually evaluate threat levels and actively respond to the needs to be resilient against such risk. for the most prevalent attack types of our customers and colleagues. Further, the COVID-19 pandemic and their potential outcomes. has changed the way our colleagues A temporary principal risk was are accessing corporate networks › We ensure our colleagues remain created to support the Committee creating a new set of challenges aware of cyber security issues and to understand and monitor the from a cyber-risk perspective. We know how to report incidents as impact of the pandemic on the have proactively addressed these part of our defence strategy. Group’s risk profile. The risk was challenges and mobilised additional › Our governance structure around monitored and reported during security monitoring and controls. cyber security was calibrated the first half of 2020 by identification › The Group adheres to a number further to respond to the new of early warning indicators as the of industry leading information and emerging cyber risks. business responded to COVID-19. security standards and practices. › The Group manages personal and The reporting of COVID-19 as a These risk governance measures, cardholder data for its customers and standalone risk has now ceased and security practices and certifications employees. During the year, the Group we continue to monitor the COVID-19 give our investors and customers made further progress to strengthen confidence in our security approach. impact as part of the existing its data privacy practices by adopting principal risk framework. In the › We continue to invest in and enhance a Group-wide Data Protection Policy principal risk section below we will our cyber security frameworks and enhancing internal data privacy controls including the appointment of explain how COVID-19 has impacted and capabilities to improve our security posture and resilience. a Group Data Protection Officer and some of our principal risks and expanding the scope of its existing the actions taken by the Group Regulatory Change Management to manage those risks. Committee to include Data Privacy.

More about cyber security See page 80

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 75

Principal and emerging risk trends Further detail on the new and timelines during 2021. Risk profiles We continue to see the risk trends emerging risks can be found have now been documented for all remaining stable for our principal on page 87. The Board has business units across the Group in risks with further investments in also reaffirmed the Group’s risk the form of risk assessments which our cyber security and technology appetite for the year 2021. help business and support functions infrastructure being particularly in identifying, mitigating and noteworthy. However, we recognise How we manage risk reporting their risks and controls. that we operate in a dynamic We have a dynamic, practical Corporate risks, which act as the ‘link’ business environment and that our and action-oriented ERMF, which between the principal risks and unit risk profile will continue to evolve helps us in proactively responding level risks, have also been defined. over time. We continue to remain to changes in our business This helps in creating a common focused on new and emerging risks environment, whilst continuing risk taxonomy across the Group which could adversely affect our to deliver on our expectations and ensures consistency of accepted risk profile and strategic of increased transparency, value understanding and reporting of planning in the longer term. protection and creation. This is actual and emerging risk events. supported by our use of the three We have revisited these risks which The Group continues to use its ERMF lines of defence model and the are primarily driven by external to enable management to make functional responsibilities and factors including cyber, regulation, sound risk-based decisions in relation oversight committees that support it. market stability and climate change. to strategic initiatives. The proposed The increasing risk on execution is We have implemented most of the DPO acquisition was a recent driven by increased levels of activity core components as part of the example where the Group developed and we continue to assess, prioritise ERMF design and the remaining a separate risk profile of the DPO and increase our capacity to deliver components are on track to be business to determine how the against our strategic objectives. implemented within the committed Group’s overall risk profile would be

How we manage risk Quarterly reporting Setting risk strategy, Board of Directors appetite and culture. (‘BOD’) Monitoring of Board Committees’ Oversees the Board Committees performance. implementation of the (Board Audit and ERMF and risk culture. Risk Committee) Monitoring of principal Quarterly reporting risks and KRIs.

Quarterly reporting

1st Line of Defence 2nd Line of Defence 3rd Line of Defence

Assesses ERM Network Executive Manages each of the Enterprise Risk capabilities. Management risk divisions and Management Implements and leads Committee ensures effective Committee (‘ERMC’) any major initiatives implementation of risk or changes. management practices.

Quarterly reporting Quarterly reporting Quarterly reporting

Owners of the risks Issuing and Acquiring Reviews and Risk Management Provides assurance Internal Audit (‘IA’) and internal control. Business (Middle monitors risks, Function to Executive Accountable for East and Africa) internal controls, (Operational, Fraud, Management and performance of mandatory Credit and Board committees on activities within the reporting, regulatory, Information Security) the application and stated risk appetite card schemes effectiveness of the and tolerance limits. Support Functions requirements and Compliance Function ERM framework and Additional Assurance (Operations, IT, HR, mitigations. (Regulatory, AML, risk culture. Provision Finance, Products, Sanctions and Card Marketing, Strategy) schemes guidelines monitoring)

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Principal Risks and Uncertainties continued

impacted by the acquisition. This During the year, management While 2020 has been a challenging allowed where relevant for short and has sought to build a richer year due to the COVID-19 pandemic, longer-term mitigating actions to be understanding of the risks facing the Group has emerged stronger as a agreed and in due course mobilised. the Group’s operations. A number result of a successful implementation of our successes as part of the of a robust Business Continuity Our approach to risk management management of our operational programme which enabled the Group At Network International, we maintain risks are set out below: to continue to provide services to a robust and sustainable ERMF, which our customers seamlessly. ensures risks are properly identified, › We completed all functional assessed against tolerance levels and risk assessments across all Risk appetite appropriately managed across the Group locations; Risk appetite is the amount of risk Group. Our ERMF is designed to we are willing to take in pursuit of › We implemented risk and control minimise the potential threats to our objectives. It defines the level of self-assessments (‘RCSA’) for our achieve our objectives. In 2020, risk at which appropriate actions are operations function; we completed a thorough risk needed to reduce risk to a level that assessment process that commenced › We completed questionnaire- we are willing to accept. As defined in 2019 initially prioritising higher risk based risk reviews for our critical in our principal risks disclosure we areas followed by lower risk business vendors to provide comfort over consider risks from a low, balanced units. The overall approach was those partners critical to our and high perspective. Our risk underpinned by a bottom-up delivery and supply chain cycle appetite is not static and may change approach and examined from during the COVID-19 pandemic; over time in line with changing a top-down perspective. capabilities for managing risk › We revised all our existing risk and our business environment. management policies to be aligned with the ERMF which The risk appetite statement is were approved by the Board reviewed and approved by the and rolled out to our colleagues. Board annually.

Our approach to risk management

Risk Identification Inherent Risk Existing Controls Residual Risk › Consideration of initial Assessment › Identification and Assessment risk information, causes, › Application of inherent risk assessment of controls that › Application of residual risk sources, events and scoring based on inherent mitigate risk event occurring. scoring based on residual circumstances which impact and probability. › Assessment of design and impact and probability. could have material impact. › Inherent scoring does not operating effectiveness. › Residual scoring considers › Assignment of risk consider mitigation controls. the existing control ownership and › Prioritisation of risk and environment. development of control activities. documentation.

Business Environment Oversight Risk Monitoring Action Planning › Utilisation of our business › The ERMC and Executive & Reporting › Risk treatment approach understanding and internal/ Management Committee › The Group monitors the is considered for each risk external sources. provide ongoing review risks for any changes in (treat, tolerate, terminate › Understanding of our and challenge to facilitate risk trend. or transfer). business strategy and the approach. › Reports and escalates › Development of risk defined risk appetite. › The Board, Audit and Risk as per cycle and criteria. mitigation plans including Committee and Group target dates and Internal Audit provide further responsible persons. review and challenge and set the overall risk appetite.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 77

Group Risk Appetite Statement providing an adequate and stable › employees have risk management “At Network International, our growth return on investment and which limits accountability and escalate issues strategy is focused on maintaining our exposure to those areas where on a timely basis; our position as the best payments we have a low risk appetite and › our incentive structures described partner in the Middle East and Africa. effectively control those to which within our Remuneration Report We accept that these markets are we have a greater appetite for risk. on page 132 promote a risk subject to higher levels of geo- We believe that managing these aware culture to effectively political uncertainty and business risks in the right way will support manage risk and remunerate risk than those in more developed our aim of enabling commerce in employees accordingly; markets, and are also accepting of the world’s most under penetrated any concentration risk based upon payments markets.” › we adopt a culture of “learning our entry into these markets and from our mistakes” to foster territories, though we act to mitigate Risk culture continuous improvement of this through revenue diversification. The Group is committed to processes and controls; embedding a strong risk culture We will aim to balance this against to support good governance and › whistleblowing, an independent a low appetite for any risks that sound risk management practice. confidential whistleblowing compromise the confidentiality, The Board and the Executive service to enable employees to integrity or availability of our data, Management Team play a key raise their concerns through an our customers’ data or our cyber role in directing and influencing independent route; security position. Additionally, we this by ensuring that: look to minimise our exposure to › risk awareness is embedded within any risk which will adversely impact › a risk based approach is used during the Group and is grounded in our our stakeholders, operational key decision making. A recent strong ethical values and culture. performance or compliance with example has been the response by Our risk management philosophy relevant regulation and legislation. the Group to COVID-19 pandemic, is cascaded top down and bottom Network International has a low where the Group applied its ERMF up and runs through all our appetite to incur losses from to support management in making management, employees and financial risk. sound risk based decisions by connected stakeholders. We will support this appetite with developing a new temporary a level of investment that ensures principal risk to understand the To improve risk awareness across the we have suitable levels of policy impact of COVID-19 on our existing Group a comprehensive online training and controls to effectively manage principal and emerging risks. programme has been developed these risks, facilitate decision Additionally, a separate risk profile covering important risk and making and continue to support of the DPO business was also compliance topics. We have had very our growth strategy. developed to understand how the high levels of participation from our DPO risk profile might impact the colleagues across the Group in 2020. This means as a business that we Group’s overall risk profile; have an informed appetite to taking The importance of risk culture is risks which will enable us to drive › a consistent tone from the top reinforced in the Group’s policies growth in a sustainable manner and clear responsibilities for risk and standards and the Code of identification and challenge; refer Conduct, to which all our colleagues to responsible business section attest annually as part of the annual on page 56; training programme.

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Principal Risks and Uncertainties continued

Focus areas for 2021 In 2021 we will focus on further embedding our approach to risk management throughout our business, markets and support functions to build an even richer picture of risk information. The priorities for Group Risk throughout 2021 will be:

Priorities for 2021 Rationale Completion of the Governance Risk and This will provide us with a centralised tool for managing risks, controls, risk Compliance platform implementation. assessments and loss management. The platform enables cross-functional collaboration and alignment. Complete the implementation of RCSA RCSA helps the first line function in developing its control testing standards for the for all functional units. identified controls documented in the risk assessments and tests its effectiveness on defined frequencies. RCSA also helps in promoting and embedding a risk awareness and management culture across the Group through effective process governance. Completion of the Annual Assurance To provide assurance on the effectiveness of Group’s current control environment plan for 2021. by the second line of defence and to ensure these are aligned and meeting the overall Group’s business objectives. Completion of separation of Network To achieve self-sufficiency in the area of Cyber Security and implement enhanced International Group ‘Cyber Security security solutions in line with the Group requirements. services’ from Emirates NBD Group. Integration of Group ERM framework into Implementing an integration strategy with prioritised focus on control functions as DPO Group business (post acquisition). per ERM framework. To further enhance our acquiring fraud To support growth in e-commerce business with the required risk controls. monitoring capabilities with the implementation of new e-commerce risk control tools.

The completed priorities for Group Risk in 2020:

Priorities for 2020 Benefits Enhanced whistleblowing process. Appointed an independent and confidential whistleblowing service for the Group and rolled out awareness and communication on the revised whistleblowing process. Completed the compliance Assessment of compliance risks of the changing regulations, emerging business assurance reviews. risks and ongoing money laundering and sanctions risk. Embedding of ERM framework. Further strengthen Group’s risk culture by rolling out awareness and communication on the ERM framework to our colleagues across the Group. Completed ‘bottom-up’ risk Helps business and support functions in documenting and assessing their risks assessments for all functional units. and controls for all Group functions. Initiation of RCSA. Implemented RCSA for our operations function and are on track for completing the remaining functional units. The RCSA helps the first line of defence in developing its control testing standards for the identified controls documented in the ‘bottom-up’ risk assessments and tests its effectiveness on defined frequencies. RCSA also helps in promoting and embedding a risk awareness and management culture across the Group through effective process governance. Implementation of key cyber security Implementation of Group-wide end-point detection and response (‘EDR’) solution enhancements. across all end-points and servers to protect against malware attacks. Enhanced email protection, phishing triaging and anti-spoofing controls across the Group. Enhancements in the DDOS protection across the Group including a simulation exercise to test the efficiency of the controls. Implemented a new acquiring fraud Acquiring fraud module of Way4 system was implemented. monitoring system. Acquiring portfolios of UAE and Jordan To mitigate chargeback risk posed by certain delayed delivery merchants, were subjected to a stress testing due to COVID-19 pandemic impacting their trade volumes. exercise focusing on travel and subscription merchants to mitigate risk of chargeback.

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Our principal risks and reputational risks. Inclusion For 2020, the overall risk profile We have completed a robust of the new principal risk reflects of the Group was managed at assessment of emerging and increased focus on execution risk in acceptable levels with the majority principal risks that we consider are FY21 in light of the DPO acquisition, of the Group’s principal risks falling most likely to have an impact on ENBD separation, planned Saudi within the ‘Informed’ risk rating. our business in the future. Not all Arabia market entry and revenue The overall residual risk trend risks facing the business are listed; growth plans for Africa. when compared broadly to the however, we have highlighted on In addition, two principal risks ‘Fraud’ risk profile for the prior 12 months page 87 those emerging risks that and ‘Credit’, which were disclosed last has been stable due to the we consider may have an impact on year as separate principal risks, are continuous investments in the the business. These risks are not listed now combined. Primarily both these Group’s infrastructure, resources, in any particular order of priority. risks are posed by chargebacks, fees, governance model and internal ‘Execution risk’ disclosed last year charges and scheme fines and have control framework. as an emerging risk is now being similar mitigating controls (with the The following section contains included as a new principal risk. exception of non-customer related information about the principal The Group has committed significant fraud incidents). Additional controls risks, including a summary of the capital in order to pursue its strategic and enhanced key risk indicators progress made in 2020 and the initiatives including M&A and plans to have been introduced through the priorities for 2021, their potential enter new markets. To achieve these COVID-19 period and notwithstanding impact, our risk appetite and the strategic initiatives, the Group plans the perceived higher risks associated link to our strategic priorities. to make further investments in its with businesses impacted as a infrastructure, product development result of COVID-19, actual losses and people. These strategic initiatives experienced from both a fraud and if not executed well may negatively credit perspective have remained impact our return on investment and stable throughout the year and well may expose us to adverse financial within the ‘low’ loss rate threshold.

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Principal Risks and Uncertainties continued

Link to strategic priorities

1 2 3 Capitalise on digital payments adoption Expand customer base and focus Develop commercial arrangements and enable financial inclusion on high value segments with strategic partners

4 5 6 Product expansion and Leverage technology Pursue opportunities market penetration and build capabilities for acceleration

Risk appetite rating defined Risk trends defined

Low – We will ensure Informed – An approach High – Willing to that we have sufficient which we feel could consider opportunities Decrease in No change in Increase in controls and mitigations deliver reasonable with higher levels of principal risk principal risk principal risk in place to allow for rewards, economic risk in exchange for impact and/or impact and/or impact and/or a low level of risk whilst or otherwise, by potential greater reward. probability at probability at probability at recognising there managing the risk residual level. residual level. residual level. may be a limited in an informed way. reward potential.

Cyber Security Strategic priorities Breach of the Group’s infrastructure resulting in the compromise of data or service 1 5 disruption through cyber security breaches.

Risk impact Progress during 2020 2021 plan Risk trend

An external cyber- › Completed the revalidation of the Cyber › Improve our incident response attack, insider threat Security Maturity Assessment (‘CSMA’) through implementation or third-party breach report gaps across all Group locations. of next generation security could cause the loss › Continued investment and implementation operations centre (‘SOC’). Risk appetite: Low of confidential data of new age security solutions to safeguard › Continued investment and The Group will not accept risks or service disruption the Group from emerging risks. implementation of new age which may compromise the leading to financial confidentiality, integrity and › Continued education and cyber security security solutions to safeguard loss and reputational availability of its data and its awareness programmes for the workforce. the Group from new threats. damage. customers’ data. › Cyber security mobilisation COVID-19 response in new markets of operation › Completed additional security reviews to ensure our controls are on all remote access (‘VPN’) solutions standardised across the Group. to ensure secure WFH. › Continued education and › Implemented relevant actions from various cyber security awareness security advisories on cyber threats and programmes for the workforce. emerging trends in light of COVID-19. › Following the DPO acquisition, › Increased vigilance by 24/7 security further refine pre-completion monitoring teams across all locations. work on DPO cyber controls. › Enhanced Distributed Denial of Service (‘DDOS’) protection across Group infrastructure.

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Technology Resilience Strategic priorities Risk of interruption to critical production services and delays to projects caused by limited 1 2 4 5 availability of technical skills, poor delivery by vendors, software defects introduced to production which could expose the Group to financial losses (e.g. client claims and loss of business) and reputational impact.

Risk impact Progress during 2020 2021 plan Risk trend

Undesired level of › Developed UAE Data Centre build and › Further investment into our service to customers readiness plan. technology and security due to failure or poor › Stabilised the core platforms, closed open infrastructure, including performance of opening of a new datacentre Risk appetite: Informed issues and implemented test-driven We are accepting some level technology and/or development for improved deliverable quality. in the Middle East (Dubai) system operating and further expansion of the of modest disruption, within the › Increased regression testing coverage environment resulting existing facility in Abu Dhabi relative norms of the markets enhancement and automation of in customer attrition, including targeted completion in which we operate. However regression testing. financial and/or of ENBD datacentre separation. we ensure appropriate levels of › Initiated work on developing a standard resilience are in place to minimise reputational loss. › Group-wide IT disaster recovery ‘structured service catalogue’ for issuing the impact to our customers. and business continuity testing clients on core platform. to be completed. › Automated monitoring dashboards › Further enhance and improve to allow data-driven decisions and identify the End of day and Start of day issues proactively. process – to reduce processing › Introduced improvements in software time and ensure better deployment process which reduces compliance to SLAs. downtime during system maintenance. › Continue to drive automaton COVID-19 response across business operations and › Increased Internet Bandwidth capacity IT for predictable outcomes. to manage the additional load of remote working. › Monitoring of technology daily productivity dashboards. › Reassessed critical technology vendors and obtained assurance from these vendors for continuity of services. › Provided uninterrupted field support across UAE, Egypt and Jordan for point-of-sales support and ATM service, 24x7 service from contact centre. › Supported ad-hoc urgent system change requests from clients on payment deferrals, holiday solutions, changes in ATM withdrawal limits as per central bank mandates during COVID-19 pandemic.

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Principal Risks and Uncertainties continued

Operational Resilience Strategic priorities Risk of inability to execute operational processes and deliver on contractual obligations due 1 2 4 to operational inefficiencies and discontinuity, defects, errors and delays, which could damage customer relations, decrease potential profitability and expose the Group to liability.

Risk impact Progress during 2020 2021 plan Risk trend

An unexpected › Automated majority of our Middle East › Continue to expand the scope disruption to manual processes through Robotic Process of automation through RPA operational Automation (‘RPA’). Based on the success in Africa and other functions performance that of the Middle East processes, we have in Middle East to minimise Risk appetite: Informed may cause damage commenced automation in Africa. processing errors. Whilst we continue to enhance to customer our control framework across the › The Group Operations across portfolios › To further enhance our straight Group we are accepting of some relations or financial have been carrying out continuous process through processing and minimal loss to the business. degree of operational failure from improvement tracking (‘CPIT’) to critically touch point engagement, plan time to time provided the impact evaluate the process flow and eliminate to introduce digital onboarding of failures remains within avoidable steps for better straight through for the merchant acquiring acceptable limits. processing (‘STP’). business in the Middle East, › Completed risk assessments (‘RAs’) self-service solution for the and implemented RCSAs programme merchants in Middle East, and for all operations units as part of ERMF. remote ATM management for the Egypt business. COVID-19 response › Automation of customer › Established COVID-19 assessment team metrics for alignment and to monitor and actively respond to the ensuring more engaged clients. COVID-19 situation. › Performed an assessment of our pre- COVID-19 control environment and introduced enhanced controls in a number of areas in response to COVID-19 to ensure that the control environment remains effective and supports the remote working model. › Swiftly activated Business Continuity Plan (‘BCP’) by moving all units to work from home. Currently all operations functions across all geographies are working from home seamlessly. › The effectiveness of automation was visible during the pandemic as teams could seamlessly move to a work from home scenario while continuing to maintain service delivery standards and continued customer satisfaction.

Strategy and Business Strategic priorities Risk of Group’s ability to maintain its position as the best payments partner 1 2 3 4 5 6 in the Middle East and Africa.

Risk impact Progress during 2020 2021 plan Risk trend

We do not retain our › Continued to enhance and expand product › Focus on delivering DPO strategic position as capabilities within the Group. business plan and commercial the best payments › Launched Commercial Card proposition synergies once the transaction partner in the Middle has closed. Risk appetite: Informed enabling Network Mastercard and their Revenue growth in line with East and Africa, customers to capture B2B payment streams. › Focus on delivery of Saudi impacting our ability investor expectations and no › Launched a Digital Platform to enable Arabia business plan. to maintain market dilution of Group’s market position broader adoption of digital payments in › Delivery of commercial benefit share and to meet in its markets of operation. MEA through the reduction in marginal cost associated with investment growth and profit of deploying payment capabilities and in new product, in particular targets. enabling the Group to better engage with gateway, N-Genius™ digital, alternative payment methods in the region. commercial card. › Proposed acquisition of DPO gives access › Continue to deepen to faster e-commerce revenue pools and relationship with Mastercard ability to provide a broader set of enabling value generation capabilities to existing customers. for both organisations.

COVID-19 response › Implemented a number of practical support measures for customers across the business and our programme of cash support to micro-SMEs.

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People Strategic priorities Inability to attract, develop and retain a skilled workforce and inconsistent organisational 1 2 4 5 6 culture across the Group.

Risk impact Progress during 2020 2021 plan Risk trend

We are unable to › Launched a new L&D Charter in response › Health and wellness effectively manage to employee feedback from our 2019 initiatives to continue as our workforce to Engagement Survey. ongoing activities. ensure consistent Risk appetite: Informed › Developed training calendars for › Mental well-being will Group annual attrition rate not delivery of the employees based on the training continue to be a key focus Group’s strategy to exceed defined parameters requirements obtained from the area given the continuing however we accept a modest and/ or operational performance appraisal process and the impact of the pandemic. performance. number of regretted losses Training Needs Analysis ‘TNA’ survey. › Focus on the following which do not materially impact › Excellent scores achieved from the initiatives: career counselling, operational efficiency or impact Employee Engagement Survey as well mentorship, job shadowing, our customers. as COVID-19 Actions – Feedback survey job rotation and role-specific (highlighted in a case study in the training programmes. Responsible Business section see page 65. › Continue to recognise › Updated Diversity & Inclusion Policy and reward our people and Processes. through various awards and › Appointment of new highly qualified and recognition programmes. business relevant Group CEO.

COVID-19 response › Introduced a wide range of initiatives to promote staff well-being, health and morale in light of COVID-19 pandemic. Including virtual medical services and mental health consultancy services. › Increased focus on leadership communication via enhanced contact points with employees through virtual forums, video messaging and social media platforms. › Sanitising and deep cleaning of Group offices and implemented precautionary measures. Group’s office layouts have been altered to ensure adherence to social distancing norms & thereby a safe work environment. Refer to Responsible Business section for more details and case studies.

Regulatory Compliance Strategic priorities Failure or inability to comply with relevant laws, regulations & scheme obligations. Failure to 1 2 4 5 6 identify monitor & respond to changing regulations or scheme rules. Failure to comply with regulatory reporting requirements in a timely manner.

Risk impact Progress during 2020 2021 plan Risk trend

A breach or non- › Completed compliance assurance reviews › Compliance Monitoring Plan compliance to legal in line with our annual compliance plan. to include new themed reviews or regulatory › Reviewed and updated all compliance to capture market abuse standards leading to policies. regulations and a review of Risk appetite: Low penalties, sanctions the whistleblower process. The Group will not accept › Launched new service to provide an or reputational practices which could cause independent confidential whistleblowing › Continued focus on timely damage. breaches of laws, regulations or reporting service where all staff can raise implementation of scheme rules; or a delay and/or their concerns. new requirements from regulatory change. failure to adapt its systems, › Continued monitoring of new and processes and controls to prevent › Further strengthening emerging regulations in the MEA region material compliance breaches compliance capabilities in by Regulatory and Data Privacy Change and/or regulatory censure. Management Committee which may certain markets to meet impact operating models within existing regulatory requirements and new markets. (Jordan/Nigeria/Ghana). Refer to regulatory compliance section in the risk introduction and highlights on page 73 for more details.

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Principal Risks and Uncertainties continued

Geo-Political Strategic priorities Risk of significant political, social and economic instability in one or more of the Group’s 1 2 3 4 6 target markets which could have a material adverse effect on the Group’s business, financial condition and results of operations.

Risk impact Progress during 2020 2021 plan Risk trend

A geo-political event › Completed country risk assessments › The Group will continue to within our markets of markets the Group identified as closely monitor the markets that impacts our high risk. which have been identified ability to do business › Reviewed evolving regulatory changes as high risk. Risk appetite: High or to meet our in the payments markets where the › Post DPO acquisition the The Group’s growth strategy is strategic objectives. Group provides its services. geographic footprint will focused on markets which are likely to be subject to higher levels › Completed due diligence review expand for the combined of political, legal, economic and for issuing clients across all regions. Group and an assessment will be conducted on countries social instability than those in COVID-19 response where the Group does not more developed markets. › Continued management focus on have any business activities. executing acceleration opportunities to further diversify business mix.

Financial Strategic priorities Financial risks for the Group arise mainly from the following three elements: (1) Not having 1 2 3 4 6 sufficient liquidity to meet our obligations as they fall due; (2) Exposure to adverse movements in foreign exchange rates arising from Group’s foreign operations and transactions in currencies other than AED and pegged currencies; and (3) Exposure to adverse interest rate risk primarily on our variable rate long-term borrowing/revolving line of credit, which we use to manage our working capital needs.

Risk impact Progress during 2020 2021 plan Risk trend

Our liquidity, › Implemented financial risk management › The Group is in the process foreign exchange policies related to Liquidity, Interest Rate of developing policies to or interest rate risks and Cash Management. further manage financial are not effectively risks concerning FX, debt Risk appetite: Informed › Further refining of robust stress The Group will manage its managed affecting testing to ensure liquidity risks remain management and derivative the business’s and financial instruments. liquidity, FX and interest fully manageable even under severe rate risks in line with agreed ability to meet its stress scenarios. › Continued monitoring of financial obligations, policies and thresholds. › Refinanced and upsized the Group’s liquidity position to ensure profitability targets term loan to ensure that we have sufficient funds and liquidity or working ample liquidity headroom to meet headroom are available in capital needs. our financial obligations. our borrowing facilities across the Group. › Realised savings in interest costs due to the lower interest rate environment › Exercise extension option and effective renegotiation on our available on our revolver credit term loan margins. facility that will allow us to have further access to liquidity COVID-19 response if required. › Enhanced monitoring of liquidity position and covenant compliance throughout the year in view of the pandemic.

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Third Party Strategic priorities The Group‘s reliance on third parties to provide systems, technology infrastructure, 1 3 4 5 product development and service delivery. Risk of data breaches of third-party’s systems, service disruptions with no alternatives, non-compliance to contractual obligations, applicable laws and international standards.

Risk impact Progress during 2020 2021 plan Risk trend

A third-party › Completed 40% desktop based reviews › Continue to complete the provider does not conducted through due diligence remaining desktop reviews meet its obligations, questionnaires for high risk vendors. through due diligence which negatively The reviews helped to ensure that these questionnaires for high-risk Risk appetite: Informed impacts our customer vendors were compliant with Group vendors. The Group will not accept risks relationships, and internal policies. › Monitoring and closure of which may compromise the causes disruption › Completed vendor contract reviews issues identified as part of confidentiality, integrity and to business for high risk vendors to identify desktop reviews with the availability of its data and its performance. contractual risks. high risk vendors. customers’ data. › Completed financial stability reviews › The Group will continue to for high risk vendors. address the contractual › Completed vendor name screening risks identified during the against all international sanction list vendor contract reviews, and adverse media. as appropriate. › Enhancing of vendor COVID-19 response onboarding due diligence › Vendors which were considered critical process. during the COVID-19 pandemic were › Continue to monitor vendor identified and assurances were obtained service performance for high for continuity of services. risk vendors. › Develop an assurance programme for medium risk vendors.

Execution Strategic priorities Our ambitious growth and expansion plans could be compromised if we are not able to 1 2 3 4 5 6 deliver critical internal transformational projects or strategically important projects within expected deadlines. Our growth plans could create heightened levels of risk with regard to people and organisational capacity as we execute our growth plans to ensure on time delivery without disruption to our day to day operations.

Risk impact Progress during 2020 2021 plan Risk trend

We fail to deliver › Developed UAE Data Centre build and › Complete the UAE Data critical strategic readiness plan. Centre migration and physical projects on time and › Completed pre-work for Saudi Arabia separation from Emirates Risk appetite: Informed on budget, deferring Data Centre build and readiness plan. NBD Data Centres. or stalling growth and The Group has limited appetite › Developed ground work for ‘New Ways › Continue to execute the Saudi increasing operational for late or over budget delivery of Working’ initiative. Arabia entry including work of critical strategic projects. and capital expenses. on Saudi Arabia Data Centre. › Completed risk assessment on the proposed DPO acquisition. Documented › Continuous evolution of risks, assumptions, issues and optimising the way we dependencies with mitigation actions. work under the ‘New Ways of Working’ initiative. › DPO, continue to build out integration plan until completion, then execute. › Monitoring the progress of key strategic projects.

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Principal Risks and Uncertainties continued

Fraud and Credit Strategic priorities Risk of compromise of card or merchant data or compromise of systems or networks or 1 2 4 5 collusive merchants with the intention of performing unauthorised payment transactions for financial or non-financial gain resulting in losses to the Group or Group’s clients. Risk of financial or non-financial losses arising due to internal or external parties making a negligent and/or intentional fraudulent misrepresentation against the Group or any of its clients. The risk of merchants’ inability to meet obligations resulting in chargebacks, refunds, scheme fines, fees and other charges. Risk of clients’ inability to settle invoices for services received as part of issuing or acquiring processing. The risk that the Group will be liable for meeting the settlement obligation of sponsored issuing clients where such clients are unable to do so or comply with scheme rules.

Risk impact Progress during 2020 2021 plan Risk trend

Higher level of losses › Fraud risk KRIs have remained well › To further enhance our resulting in material below thresholds. acquiring fraud monitoring impact on reported › Implemented a new acquiring fraud capabilities with the results and material monitoring system. implementation of new Risk appetite: Informed damage to reputation. e-commerce risk control tools. Acquiring fraud losses as a › Credit risk KRIs have remained well below percentage of sales to be less thresholds despite COVID-19. › Enhanced monitoring of delinquency levels of processing than market average of 6.3 bps. › Credit pre-approval provided for straight clients’ receivables to ensure Enterprise level fraud losses through e-com merchant onboarding. that losses are minimised. to be less than 5% of EBITDA. Unrecoverable chargebacks and COVID-19 response › With the planned acquisition credit losses to revenue ratio › Fraud monitoring processes were of DPO and its portfolio of not to exceed more than 5% by conducted with enhanced due diligence. e-commerce merchants in portfolio. All sponsored issuing Africa, their credit risk profile › Implemented controls for preventing any clients’ settlements to be cleared will be assessed to measure malicious processing transfer by blocking within 15 days. of all system level access for Operations the impact on Group’s overall staff for after office hours. risk profile. › Acquiring portfolios of UAE and Jordan were subjected to a stress testing exercise focusing on travel and subscription merchants. Unrecovered chargebacks and refunds of these merchants were well below the forecasted stress scenarios and also well within accepted risk appetite KRIs. › Chargebacks and refunds of airline and selected high risk merchants were paid from withheld reserves or through pre-funding arrangements in place with merchants. › Unrecovered chargebacks and refunds of the Group Acquiring portfolio reduced to less than pre COVID-19 levels and were well within accepted risk appetite KRIs. › Implemented enhanced risk profiling and early risk warning monitoring of SME merchant portfolio.

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Emerging risks Our ERM process ensures be superseded by other risks or Emerging risks have the potential emerging risks are considered to cease to be relevant as the internal to increase in significance and affect aid the Audit and Risk Committee’s or external environment in which the performance of the Group and, assessment of whether the Group we operate evolves. Additionally, we as such, are continually monitored is adequately prepared for the recognise that some of our principal through our existing risk management potential opportunities and threats risks are more volatile or fast processes by risk owners at all levels they present. The process enables changing than others and, therefore, of the Group. We also use tools such new risks to be discussed at an would benefit from the increased as horizon scanning, operational risk early stage, allowing us to analyse management processes that apply aggregation and external sources them thoroughly and assess to emerging risks. A non-exhaustive to support our analysis. The outputs potential exposure. list of some current emerging risks of these processes are reported to of relevance to the Group and those We closely monitor emerging the Audit and Risk Committee and principal risks that are subject to risks and with time they may Board of Directors for their review the emerging risk process are set become principal risks as they and assessment. out below. mature. Emerging risks may also

Increasingly sophisticated New and emerging regulatory Climate change: cybersecurity threats: changes in the MEA: In an ever-changing world, we We expect to see an increase in The increase in growth and innovation recognise that we have a responsibility the level of sophistication of cyber of payments services and the proposed to meet our environmental and related attacks as a result of the DPO acquisition exposes the Group sustainability commitments and shifting geo-political tensions in to a number of additional regulatory obligations. We have made progress the MEA. We regularly intercept regimes focusing on payment services over the last year in measuring and sophisticated and malicious and data governance. The Group’s reporting our energy consumptions. third-party attempts to identify and ability to navigate these changing We will continue to develop systems exploit system vulnerabilities, or environments will be a long-term driver to report on GHG emissions, and to which aim to penetrate or bypass of competitive advantage. understand the risks that a changing our security measures, in order to climate may present to our business. gain unauthorised access to our In the short to medium term these networks and systems or those initiatives could present increased Competition risk: of our associated third parties. complexity and cost to our Network recognises that COVID-19 operating model. has accelerated the shift from cash We follow a defence-in-depth to digital payments resulting in an model to ensure we are proactively See page 73 and 83 for more details. increasingly competitive landscape in employing multiple methods of the Middle East and Africa region. Our defence at different layers to protect Political change: ability to grow our business and deliver our systems against intrusion and Our business focus is on the emerging an exceptional customer experience attack. However, we cannot always markets of Middle East and Africa. may be impeded by new market be certain that these measures will We recognise some countries within entrants and established payments be successful and will be sufficient this region have a history of political service providers operating in certain to counter all current and emerging volatility. The risk of continued territories, be it though competitive cyber threats. political and economic change could pricing, enhanced capabilities and affect our operating results. Changes solutions, or skilled resources with local See page 74 and 80 for more details. in governments may increase the market knowledge. complexity of serving customers in a country due to actual or potential political or military conflict; and the imposition of UN, US or other sanctions may restrict our ability to service customers in those countries.

See page 84 for more details.

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Directors’ Duties

Statement in respect of S.172(1) Companies Act 2006 Directors’ duties The Directors of the Company, as those of all UK companies, must act in accordance with a set of general duties, which are set out in the UK Companies Act 2006 (‘the Act’).

S.172 (1) of that Act is summarised as follows: A director of a company must act in a way he/she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

(a) the likely consequences of any decision in the long term, (b) the interests of the company’s employees, (c) the need to foster the company’s business relationships with suppliers, customers and others, (d) the impact of the company’s operations on the community and the environment, (e) the desirability of the company maintaining a reputation for high standards of business conduct, and (f) the need to act fairly as between members of the company. The Directors’ duties are included as part of the Board induction programme given to all newly appointed Directors prior to attending their first Board meeting. The Directors are mindful of their duties and Board papers address stakeholder factors where judged relevant.

How the Directors consider the matters set out in S.172 (1) (a) to (f) The Strategic Report, Governance Report, Remuneration Report and Directors’ Report from pages 1, 90, 132 and 149 respectively disclose in detail: the mechanisms by which management and the Board engage with, receive regular information on, and assess the relationships with shareholders, employees, suppliers, customers, regulators and the community; the emphasis the Board has placed on developing a healthy culture amongst the Directors, reflecting the values and high standards of business conduct they encourage across the organisation; the importance the Directors place on positively maintaining those values and relationships; and the progress made in achieving high standards of business conduct and compliance with the 2018 UK Corporate Governance Code (‘the Code’).

By way of example: › The Board is focused on the consequences of its decision making over the long term and the impact on each of our stakeholder groups. Our strategy, which is key to building our business for long-term growth, is focused on providing solutions that allow customers to bring digital payments to more consumers across the MEA region. In pursuing our strategy, we are capitalising on growth opportunities across our markets and delivering solid financial performance. Pages 18 and 19 in the Strategic Report present our strategic framework, set in the context of our purpose, and the progress we have made during the year. The Board continuously keeps the strategy under review at each Board meeting and sets aside a two-day meeting dedicated to a thorough development review. The Board also sets an annual budget and provides oversight of sound financial and internal controls across the Group. The Board, supported by the work of the Audit and Risk Committee, has embedded a robust risk culture across the Group, under which risks are identified, mitigated and monitored against a pre-determined risk appetite in respect of each principal risk category. › Our strategy, which is driving the success of the Company, is dependent upon our solid business relationships with our customers, business strategic partners, suppliers, and regulators (please refer to pages 56 to 70 in this report). The Board is mindful of our purpose (described on page 9) and of maintaining and developing those relationships when reviewing the strategy. During the year and throughout the COVID-19 pandemic, the Board has increased its focus on maintaining its relationships with, and protecting the interests of, our stakeholders.

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› The Board has overseen the progression of our People agenda, has ensured there are good levels of bilateral engagement with the wider workforce and a significant focus on the development and support of our employees as fully described in the ‘our people’ section of this report on pages 60. As with our other stakeholder groups, the Board has increased its engagement with our wider workforce to protect their interests during the COVID-19 pandemic. The Remuneration Committee is cognisant that the CEO to employee pay ratio is a key lens when considering the appropriateness of executive pay outcomes. The Remuneration Committee also ensures that wider colleague pay and policies, and cultural context are intertwined with its remit and activities. › We support the communities in which we operate, by creating employment and opportunities for our people, supporting the businesses of our customers and helping them to understand and service their consumers. Our businesses provide community support as described in the Responsible Business section of this report on page 68 and by taking steps to safeguard our environment as described in the Safeguarding our environment section of this report on page 66. › The Board, under the leadership of the Chair, has ensured there is a positive culture amongst the Directors, reflecting the values it encourages across the organisation (please refer to the section on the Group’s values and culture on page 100 in the Corporate Governance Report). › The Board has continued to uphold high standards of corporate governance as it makes significant progress towards full compliance with the Code, reflecting the interests of our shareholders as a London Listed Company (as described in the Corporate Governance Report on pages 99). By way of example, the Board ensured an orderly transition in its membership with the appointment of two additional Independent Non-Executive Directors in January 2020, three months prior to three Directors (who had each been previously appointed under the relevant provisions of the respective Relationship Agreements with the Company’s former PE owners) vacating their positions. The Board was further strengthened by the appointment of two additional Independent Non-Executives at the start of 2021. The broad range of skills, experience and knowledge possessed by our diverse Board is detailed on page 92.

› The Company has a strategic and commercial agreement with Mastercard as described within the Governance Report on page 109. Separately at the time of the IPO, Mastercard acquired shares in the Company giving them total voting rights of 9.08% (as disclosed in the Directors’ Report on page 151). Such investment was made in the market at arm’s-length and does not confer any additional rights over and above those enjoyed by other shareholders, although the strategic agreement allows Mastercard to nominate an Observer to the Board, such Observer may attend meetings and receive papers, but not vote.

In the performance of its role, and ingrained in its decision-making processes, the Board has regard to, and believes it has discharged, its duties reflected in S.172 (1) of the Act.

The Strategic Report has been approved and is signed by order of the Board by:

Nandan Mer Chief Executive Officer 7 March 2021

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Corporate Governance Report

Dear Shareholder, expertise in the payments space and Introduction operations throughout the Middle East I am pleased to report that we have and Africa. Later in the year, we further enhanced our governance announced the appointment of Diane practices during the year, building Radley and Monique Shivanandan on the firm foundations we laid in as Independent Non-Executive 2019. We have carefully managed Directors with effect from 1 January the construct of our Board to reflect 2021. Both Diane and Monique bring the transition of the Company’s invaluable skills, experience and ownership from private equity to knowledge as they have had rich that of a UK-listed constituent of the careers in their respective fields, as FTSE 250; and we have overseen well as in executive roles, and will the ongoing development of our reinforce the Board’s skillset to help culture with the implementation of the Company achieve its strategic our Enterprise Risk Management objectives in Technology and Framework and our People agenda, Product areas and the Africa region. while strengthening the engagement We are also delighted that Rohit with our customers, employees, Malhotra, our highly experienced shareholders, and other stakeholders Group Chief Financial Officer since during a challenging year brought 2015, joined the Board on 2 June about by the COVID-19 situation. 2020. Following all these changes, We have carefully I am delighted to report that we managed the construct The Board have a strong, balanced and diverse of the Board… and I would like to welcome Nandan Mer, Board, the composition of which who we appointed as our new Group is fully aligned with UK Corporate have increased our CEO with effect from 1 February 2021. Governance Code requirements. engagement with Nandan has a wide breadth of our customers and experience across the consumer credit All newly appointed Directors undergo a comprehensive induction employees during and payment industries in several international markets, including within programme, which we have this challenging year.” the Middle East and Africa. He has a developed further during the year strong track record of building and as we learn from our experience. Ron Kalifa OBE growing businesses over 30 years in a This complements the ongoing Chairman number of global markets with leading development programme we financial institutions; and strong sector introduced last year, comprising expertise makes him an excellent a series of strategy support appointment to lead Network through presentations at regular Board the next stage of our ambitious meetings. The aim of these two strategic growth plans. I would like to programmes is to continuously pay special thanks to Simon Haslam develop the Board’s effectiveness for his invaluable contribution during by ensuring all Directors possess the his tenure as our CEO. Simon leaves knowledge to be able to contribute a strong business and a legacy of fully to the Board’s review and success and we wish him well in development of strategy. his retirement. We conducted a thorough externally Over a year ago now, the appointment facilitated Board evaluation in the of Anil Dua and Ali Mazanderani on second half of the year, which 22 January 2020 as Independent provided useful insights to develop an Non-Executive Directors strengthened action plan more fully disclosed within our Board with their significant the Governance Report on page 111.

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Finally, I would like to give thanks We will continue with our enhanced page 62. Furthermore, management again to Shayne Nelson, Daniel programme of engagement in 2021 has progressed our People agenda Zilberman and Aaron Goldman, and beyond and look forward to with the roll out of our new Employee who resigned from our Board on your support at our second Annual Charter and our updated Equality, 30 April 2020 in alignment with General Meeting on 20 May 2021. Diversity and Inclusion Policy, which the reductions in shareholdings and are more fully described in our the termination of the Relationship Continual focus on our many Responsible Business section from Agreements with our former private stakeholders is crucial to the effective page 60. We have also enhanced our equity owners. running of our business and, in view of risk culture with the implementation the challenges brought about by the of our new Enterprise Risk Engagement with our shareholders COVID-19 situation, we have increased Management Framework (‘ERMF’), and other key stakeholders our engagement, particularly with our which defined the way we identify and Active engagement with our customers, to understand their issues manage risk; a good example, worthy shareholders and key stakeholders and protect them where possible. of highlighting here, is in respect of the is of great importance to us. More details on the engagement with proposed DPO acquisition where the the Company’s stakeholders can be Group developed a separate risk profile We have a programme of regular found in the Strategic Report on page of their business to demonstrate how meetings with our major shareholders 28 and our S.172 statement can be the DPO risk profile might impact the led by our CEO and our CFO, to found on pages 88 to 89, which Group’s overall risk profile. discuss strategy and performance. provides examples of how the Board I have also met with many of our has considered stakeholders in its Management has been working investors to discuss matters of decision making. in partnership with all employees governance and broader strategic to embed our desired culture topics. The Board welcomes Employees and culture throughout the organisation for feedback from investors and the The recruitment, motivation, the benefit of our business and all market in general and during the year, development and retention of our who work within it. I am particularly this informed our decision to further employees at all levels is critical to the pleased that as a result of their increase engagement and enhance success of our business and the Board collective efforts, our employee financial disclosures. Victoria Hull, monitors progress carefully at every engagement score has improved chair of the Remuneration Board meeting. As most of our by eight percentage points to 73%. Committee, has engaged with them employees have been working from A full summary of the excellent to discuss our approach to executive home for a large part of the year, their progress made in the development remuneration, including the health and well-being and increased of our people and our culture is given performance measures and targets engagement to understand their as part of the Strategic Report on for our annual and long-term concerns has been one of the key pages 64 to 65. incentive arrangements. Our priorities. Management has launched a performance measures are fully number of regular virtual engagement aligned with the targets and KPIs initiatives to carry out a two-way Ron Kalifa OBE for the delivery of our strategy. flow of communication and Q&As, Chairman details of which are summarised on 7 March 2021

Group values Our values underpin our activities and support our approach to sustainable and responsible business.

› Character We are accountable to our employees and our customers. We maintain the utmost integrity in all our interactions at all times › Customer Our customers come first. We are committed to being a valued partner to all our customers › Continuity We continuously innovate and seek to excel in everything we do as we expand our reach into new markets › Collaboration Teamwork is the cornerstone of our success

For more details, please see the Strategic Report from page 56.

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Corporate Governance Report continued

Highlights of progress made during 2020

At Network International, we have taken great strides to embed solid governance throughout our organisation. Here are the highlights of the significant progress we have achieved during the year:

Board composition Board gender diversity Nationality of the Directors

1 1 1 Chair 27% Executive Directors Men 1 British 2 Senior Independent Women American Director 1 Indian Independent 6 Singaporean Non-Executive South African 1 Directors 1 6 UAE National Non-Executive 73% Director 1

Skills and experience

Ron Darren Anil Victoria Ali Habib Diane Monique Suryanarayan Kalifa OBE Pope Dua Hull Mazanderani Al Mulla Radley Shivanandan Subramanian Chairman Senior Independent Independent Independent Independent Independent Independent Non-Executive Independent Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Director Non-Executive Director Director Director Director Director Director Director

Listed NED Experience

Financial Services/ Payments Industry Experience

Doing Business/ market knowledge in MEA Africa Africa ME South Africa

Finance/Audit Experience

HR/REMCO Experience

M&A activity

Technology & Product

Fintech Trends

Please see page 113 for details on how the Board has evolved since the IPO in April 2019.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 93

The Board Understanding the views We have built a strong and diverse Board with a breadth of skills, of our shareholders: experience, and knowledge. We have appointed four independent › The Board receives regular Non-Executive Directors, ensuring an orderly transition when updates from the Company’s introducing more independence on the Board; and two Executive brokers and Investor Relations Directors, managing the seamless succession of our CEO. team on investor perceptions in relation to strategy, performance governance and remuneration. › The Board was cognisant of Board effectiveness: the shareholder experience › We have developed a comprehensive forward programme of work during the year, and open to to ensure we cover the breadth of responsibilities and duties for understand feedback and the Board and each of its Committees. issues raised by the market. › We conducted our first Board and Committee evaluation and have This informed the Company’s agreed an action plan to support our continuous development. decision to increase shareholder engagement and enhance › We have further developed our knowledge of the business and financial disclosures. a positive culture within the Boardroom. › The Chairman has also engaged › The review concluded that the Board was considered highly effective with a number of larger sized with follow up actions primarily focused on building stronger Board shareholders during the year, relationships in a COVID-19 impacted environment and formalising to discuss matters of Corporate ongoing business knowledge development. Governance and broader strategic topics; whilst the Chair of the Remuneration Committee, Victoria Hull, consulted with major shareholders regarding the proposed Remuneration Policy.

Risk management and assurance: Our people and culture: › Despite the unprecedented › We have established a clear › We have progressed our challenges brought about by risk governance model utilising People agenda with the roll out the COVID-19 restrictions, we the three lines of defence of our new Employee Charter. held a successful Annual General model to ensure effective Management has been working Meeting enabling shareholders risk management, oversight in partnership with all employees to fully participate electronically. and assurance. to embed our desired culture throughout the organisation for › We have embedded our the benefit of our business and Enterprise Risk Management Understanding the views all who work within it. Framework throughout our of our other stakeholders: organisation and there is an › We have increased our › The Board is highly supportive ongoing process to identify engagement with our people, of its duties to promote the and evaluate risk, supporting supporting them with their success of the Company, our decision making and the health and well-being during a engage with, and support way we manage our business. difficult year when most of our broader stakeholder groups. employees have been working › To support the proposal › There is much focus and from home. to acquire DPO, the Group oversight of key customer developed a separate risk › As a result of the collective relationships, which is profile of their business to efforts of our people across fundamental to the success demonstrate how the DPO the organisation, our employee of the business. risk profile impacted the engagement score has › The Board ensures it is kept Group’s overall risk profile. improved by eight percentage informed and up to date on points to 73%. › We monitored the impact key supplier relationships, of the COVID-19 situation on › We have formalised the including the requisite vendor our people, our customers approach to reviewing all Code of Conduct. and our financial position. our workforce engagement › The Board is also highly mechanisms through the › We strengthened our Group supportive of the financial aid Remuneration Committee, Internal Audit function and donated to community projects which reports its findings welcomed the improvement and charities in our markets. in its effectiveness. to the Board.

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Board of Directors

Ron Kalifa OBE Nandan Mer Darren Pope Anil Dua Independent Chairman Group Chief Executive Officer Senior Independent Independent Non-Executive Director Non-Executive Director

Committee membership Committee membership Committee membership Committee membership Chair of Nomination Committee None Chair of Audit and Risk Member of Audit and Risk and member of Remuneration Committee and member of Committee Committee Nomination Committee

Appointed Appointed Appointed Appointed March 2019 February 2021 March 2019 January 2020

Other current appointments Other current appointments Other current appointments Other current appointments Chairman of FutureLearn None Senior Independent Director, Non-Executive Director, Non-Executive Director, Equiniti Group plc Liquid Telecom England & Wales Cricket Board Independent Non-Executive Non-Executive Director, Non-Executive Director, Director, Virgin Money UK plc African Export Import Bank Court of the Bank of England Chairman of UK Subsidiary of Non-Executive Director, Nouvobanq Non-Executive Director, Silicon Valley Bank Independent Non-Executive Transport For London Director, Heirsholdings Oil and Gas Limited

Previous experience Previous experience Previous experience Previous experience Mr Kalifa has significant Mr Mer has more than 30 years’ Mr Pope is a qualified accountant Mr Dua has extensive experience experience in the payments experience in building and with over 30 years of experience operating in the pan-African industry. He was Chief Executive growing businesses, and in the financial services industry. financial services sector. Mr Dua Officer of Worldpay for over has a strong background in Most recently, Mr Pope served as is Founding Partner at Gateway, 10 years, building and leading payments, consumer finance and CFO and Board Member of TSB a private equity fund specialising Worldpay into a premier global corporate banking, in addition Bank plc. Mr Pope has held a in dynamic growth markets payments company. He is also an to the Middle East and African number of other senior positions including Africa, the Middle East operating partner to Advent markets. Prior to joining Network at Lloyds Banking Group, Egg plc and Asia. Prior to this, Mr Dua International and its advisers. International, Mr Mer had an and Prudential plc. He additionally worked for over 35 years with Mr Kalifa also sits on the boards 11-year career at Mastercard, chairs the Audit committee Standard Chartered Bank in Asia, of the England & Wales Cricket serving as Strategy Head for at Equiniti PLC and the Africa, Europe and US, where Board and Transport for London, International Markets, President Remuneration Committee at he held various roles including and is a member of the Council for the Japanese business and Virgin Money UK PLC. Regional CEO West Africa and of Imperial College, London. Head of Global Consumer Credit Regional Head of Origination Mr Kalifa was awarded an OBE and Loyalty Solutions. He has and Client Coverage, Africa. in 2018 for services to Financial also held senior positions at Services and Technology. Very American Express, Citigroup recently, Mr. Kalifa chaired the and United Bank for Africa. Independent Review of UK Fintech published by the UK Government in February 2021.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 95

Victoria Hull Rohit Malhotra Ali Mazanderani Habib Al Mulla Independent Group Chief Financial Officer Independent Independent Non-Executive Director Non-Executive Director Non-Executive Director

Committee membership Committee membership Committee membership Committee membership Chair of Remuneration None Member of Remuneration Member of Nomination Committee, and member Committee Committee of Nomination Committee

Appointed Appointed Appointed Appointed March 2019 June 2020 January 2020 March 2019

Other current appointments Other current appointments Other current appointments Other current appointments Senior Independent Director, Mr Malhotra serves on the Non-Executive Director, Partner, Baker McKenzie Ultra Electronics plc Network International Board Stone Co. Limited Habib AlMulla Non-Executive Director, of Directors Non-Executive Director, RBG Holdings plc NET1 UEPS Non-Executive Director, TTMFS Singapore PTE Limited Chairman, SaltPay

Previous experience Previous experience Previous experience Previous experience Ms Hull is a former Executive Mr Malhotra has more than 20 Mr Mazanderani has extensive Dr Habib has extensive experience Director of Invensys plc, a years of experience in financial experience in the global in UAE law. Dr Habib was Chairman FTSE 100 global industrial and activities. Prior to joining Network payments industry. Most recently, of the CIArb (Chartered Institute software company, and former International in 2010, he was Mr Mazanderani was a partner of Arbitrators) UAE Committee, Executive Director of Telewest previously the Head of Financial at Actis LLP, a global emerging Chairman of the board of trustees Communications plc. Ms Hull Policy and Processes at Emirates markets investment firm. He has for the Dubai International has experience across many NBD. Prior to that, he was one led multiple financial technology Arbitration Centre (‘DIAC’), and diverse sectors, including an of the senior team leads in the transactions, ranging from on the Board of Governors of extensive Corporate Governance Global Balance Sheet Reporting growth equity investments to American University in Dubai. and Remuneration Committee function of American Express, leveraged buyouts in global Dr Habib was the architect of the background. Her legal career working closely with the Investor businesses. Prior to this, Mr legal framework establishing the commenced at Clifford Chance Relations team and before that Mazanderani served as Lead Dubai International Financial LLP in 1986 where she gained he managed the Financial Strategy Consultant at the First Centre. Dr Habib also served as knowledge and experience Planning activities for Nestle’s National Bank of South Africa Chairman of the Legislative working internationally on South Asia Region. and as a Consultant at OC&C Committee of the Dubai Financial M&A for both public and Strategy Consultants in London. Services Authority (‘DFSA’). private companies. He currently serves as a Dr Habib has held numerous Non-Executive Director for government positions, including Stone Co Limited. as a member of the UAE Federal National Council, the federal parliament of the UAE, member of the Legislative Committee, member of the Economic Committee, Director of the Institute of Advanced Legal and Judicial Studies, in charge of training judges and prosecutors in the Emirate of Dubai and Chairman of the UAE Jurists Association.

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Board of Directors continued

Diane Radley Monique Shivanandan Suryanarayan Subramanian Simon Haslam Independent Independent Non-Executive Director Outgoing CEO Non-Executive Director Non-Executive Director

Committee membership Committee membership Committee membership Mr. Haslam led the business Member of Audit and Risk Member of Audit and Risk None through the 2020 financial year, Committee and Remuneration Committee with effect from announcing his retirement at Committee with effect from 1 January 2021 the start of 2021. Mr. Haslam 1 January 2021 stepped down from the CEO position on 31 January 2021, but will remain with the Group Appointed Appointed Appointed throughout his six-month notice January 2021 January 2021 March 2019 period to ensure a smooth Other current appointments Other current appointments Other current appointments transition to Mr. Mer. Non-Executive Director, Member of digital advisory Director, Tanfeeth LLC Transaction Capital Limited (‘JSE’) board, Fannie Mae. Director, DenizBank A.G. Non-Executive Director, Murray and Ms Shivanandan is the Group Independent Director, DXB Roberts Holdings Limited (‘JSE’) Chief Information Security Entertainments PJSC Non-Executive Director, Base (‘CISO’) for HSBC, leading Independent Chair of Audit Resources Limited (‘ASX’) the cyber security function Committee, Kuwait Food Co Non-Executive Director, Redefine for the Group. (Americana) Properties Limited (‘JSE’)

Previous experience Previous experience Previous experience Ms Radley has extensive Ms Shivanandan specialises in Mr Subramanian was Chief experience of the African market technology transformation in Financial Officer of the Emirates and specialises in finance, financial services with a specific NBD Group in Dubai from audit and risk related matters. focus on business transformation September 2010 until January Ms Radley was previously Chief leveraging technology and 2020. Mr Subramanian has over Executive Officer at Old Mutual Fintech advisory. She was most 30 years’ experience in Banking Investment Group from 2011 to recently Group Chief Information and Finance, primarily in South 2016 having held the position Officer at Chubb leading a East Asia and the Far East with of Group Finance Director team of over 5,000 employees Standard Chartered Bank and from 2008. She has led the globally, delivering change, and Royal Bank of Canada, covering Transaction Services Group service & information security. various CFO roles in geographic at PwC South Africa. She has acted as a technology and business structures across leader and digital transformation Wholesale Banking, Retail advisor, holding senior roles at and Wealth Management. Aviva, BT Group and Capital Mr Subramanian has also worked One Financial. with the Ministry of Finance and Accounting and Corporate Regulatory Authority in Singapore.

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Executive Management Team

Nandan Mer Rohit Malhotra Andrew Key Mark Diamond Jay Razzaq Group Chief Group Chief Managing Director – Group Chief Digital, Chief Risk Officer Executive Officer Financial Officer Africa Technology and and Group Operations Officer Company Secretary

Joined Joined Joined Joined Joined February 2021 October 2010 July 2017 March 2020 April 2017

Role Role Role Role Role Nandan is the Group Rohit is the Group Andrew is the Managing Mark is the Group’s Chief Jay is the Chief Risk Chief Executive Officer Chief Financial Officer Director for the Group’s Digital, Technology and Officer and Group of the Group and works and is responsible for Africa operations and Operations Officer. Mark Company Secretary and closely with the Chairman overseeing the financial is responsible for the is responsible for leading has overall responsibility and Board members to activities of the Group. acquiring and issuing the Group’s Technology for the Risk, Compliance set strategic expansion Having joined the business activities of and Operations functions and Legal functions. goals for the organisation Company in October the Group in Africa, and is responsible for Her responsibilities and lead the Executive 2010, Rohit has been and for developing a defining and delivering include the management Management Team in actively involved in the comprehensive strategy Network International’s and oversight of all the accomplishment growth of the Company to drive business digital, technology and risk-related disciplines of these objectives. for many years, including growth in the region. operations strategy across the Group, the acquisition of and capabilities across including enterprise risk Emerging Markets the enterprise. management, regulatory Payments Holdings and compliance, data in 2016. governance and information security, and the legal and secretariat teams.

Previous experience Previous experience Previous experience Previous experience Previous experience Nandan has more than Previously, Rohit was Most recently, Andrew Mark has more than Jay joined the Group 30 years’ experience in the Head of Financial was the President 21 years’ experience from Elavon, a subsidiary building and growing Policy and Processes of Elavon Europe, a of technology in the of US Bancorp, where she businesses, and has a at Emirates NBD, where subsidiary of US Bancorp banking industry. Most served as Head of Legal strong background in he led Finance systems (‘USB’), and responsible recently Mark was CIO of – International Markets. payments, consumer implementation across for the entire P&L of Alrajhi Bank, the world’s Jay has over 21 years’ finance and corporate the Group. Prior to that, the European business largest Islamic Bank with experience working banking, in addition to Rohit was one of the of Elavon. He was over 10 million customers. across a number of major the Middle East and senior team leads in the accountable for the Prior positions include financial institutions African markets. Prior Global Balance Sheet diverse range of partner Head of Transformation including Citigroup and to joining Network Reporting function of relationships that deliver at Deutsche Bank, where Royal Bank of Scotland International, Nandan American Express, distribution or product he led the global strategy Plc. She has advised had an 11-year career at working closely with the capabilities to Elavon’s and infrastructure on legal, regulatory Mastercard, serving as Investor Relations team European business and transformation across 65 and compliance issues Strategy Head for and before that he led the team of 1,400 jurisdictions, and CIO of impacting the retail International Markets, managed the Financial colleagues located in RBS’s Retail Bank and financial services and President for the Planning activities for six markets, providing Business Operations. payments services Japanese business and Nestle’s South Asia Region. end-to-end payments sectors in particular, Head of Global Consumer services to 350,000+ across a number of Credit and Loyalty customers. Prior to jurisdictions in Europe Solutions. He has also Elavon, Andrew held key and Latin America. held senior positions at positions in organisations Jay is a qualified Solicitor American Express, such as Mastercard, in England and Wales. Citigroup and United Lloyds Banking Group Bank for Africa. and Barclaycard.

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Executive Management Team continued

Paul Clarke Hend Al Ali Andrew Hocking Mona Al Ghurair Simon Haslam Head of Product and Group Head of Human Group Chief Strategy Group Chief Outgoing CEO Innovation Resources and Facilities Officer Marketing Officer

Joined Joined Joined Joined Simon led the business June 2017 July 2013 April 2017 October 2010 through the 2020 financial year, announcing Role Role Role Role his retirement at the start Paul is the Head of Hend is the Group’s Head Andrew is the Group’s Mona is the Group’s Chief of 2021. Simon stepped Product and Innovation of Human Resources Chief of Strategy and Marketing Officer. In her down from the CEO and is responsible for and Facilities and is Analytics Officer and, in role, Mona manages the position on 31 January transforming the Group responsible for leading his role, he leads market teams responsible for 2021, but will remain with into a world-class the Group’s human intelligence, strategy branding, public relations, the Group throughout his product and innovation- resourcing functions development, corporate communications, and six-month notice period centric organisation and across the UAE, Jordan development and events. She drives the to ensure a smooth oversees the end-to-end and Africa, developing analytics functions within branding and marketing transition to Nandan Mer. product lifecycle from and implementing the Network International. strategy for the Group, ideation, delivery and Group’s human optimally leveraging in-life management. resource strategy and various promotion and programmes. Under her publicity platforms, stewardship, the Group regionally and has won government internationally, to recognition and awards maximise visibility for human development for the Network and Emiratisation. International brand.

Previous experience Previous experience Previous experience Previous experience Paul was previously the Hend has more than Andrew was previously Mona has more than Managing Director at 21 years’ experience Head of Strategic 19 years of experience Barclaycard Payment working with and leading Planning at Elavon in the marketing industry Services, responsible for HR departments at working across North and has worked with product development various national and America, South America Network International and execution. He has international operations and Europe. Prior to this for more than 15 years, delivered many strategic based in the UAE. She he held a number of during which time she initiatives and was is a recipient of the positions at Barclaycard has also been involved instrumental in creating prestigious Dubai Human and Absa across both with the product, sales a world-class product Development Award issuing and acquiring and business organisation and given by the Dubai covering Europe and development units. achieving real business Economic Department. Africa where he led the change through product She is also part of the Absa Card’s strategy development. In his Women’s Committee in and change management previous tenures in the Banking Sector, which function. payments majors like is run by the Emirates Elavon Merchant Services Institute for Banking and and Worldpay, Paul was Financial Studies. responsible for the product portfolio across key markets in Europe, Mexico and South America.

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Compliance with the UK Corporate Governance Code

The Board recognises that good corporate governance plays a key role towards delivering the sustainable success of the Company, thereby enhancing shareholders’ value and contributing to wider society.

Examples of sound governance and Risk Committee composition joined the Remuneration contributing to our success are should comprise Independent Committee and therefore, from included in this report and Non-Executive Directors with a that date and up to the date of throughout the Strategic Report minimum membership of three. The this report, the composition of on pages 1 to 89. Chair of the Board should not be a the Remuneration Committee member). From 22 January 2020, is fully compliant with provision The Board is committed to the the Company complied with those 32 of the Code. principles of corporate governance two provisions as two additional contained in the UK Corporate Further explanations of our progress Independent Non-Executive Governance Code 2018 (‘the Code’), and intentions are given in the Directors were appointed to the which is publicly available at relevant parts of this report. Board, one of those Directors was www.frc.org.uk. appointed to the Audit and Risk Role and responsibilities of the This report sets out how the Committee and the Chairman Board of Directors Company applied the principles stepped down from that Committee. The Board is responsible for of the Code and its compliance › For the period 2 June 2020 to the providing strategic leadership to with the provisions of the Code end of the year, the Company did promote the long-term sustainable during the year. Throughout 2020, not comply with provision 32 success of the Company. The Board we have continued to enhance our regarding the composition of the has established and regularly reviews governance arrangements, building Remuneration Committee. at its meetings the Company’s on the significant progress following Throughout the year, the Board with purpose, values and strategy; our IPO in the prior year. the support of the Nomination additionally, the Board held a two- The Company complied with the Committee took steps to strengthen day strategy meeting during the year. Code throughout the year 2020, and the Board with the appointment of The Board also ensures that the up to the date of this report, except additional Independent Non- necessary resources are in place for as follows: Executive Directors and to allocate the Company to meet its objectives memberships of the Board’s and measures performance against › Although there are comprehensive Committees in line with the skills and those objectives at its regular Board and effective employee engagement experience of all the Independent meetings. It has set and has been mechanisms in place, which are Non-Executive Directors, avoiding overseeing a framework of prudent regularly and effectively reviewed by over-reliance on individuals where and effective controls, which enables the Board along with the progress possible. From 2 June 2020, there risks to be identified, assessed and being made with the implementation were only two Independent managed; more information about of the new Employee Charter (as Non-Executive Directors on the the new Enterprise Risk Management described within the Responsible Remuneration Committee, being Framework, which has been rolled Business section of the Strategic one short of the Code requirement out and implemented during the Report on page 60), the Board’s for a minimum of three such year, is included in the Audit and approach is not as anticipated by Directors. As permitted by the Risk Committee section of this report provision 5 of the Code. Full details Code, the Chairman of the and within the Principal Risks and of the Board’s approach is disclosed Company, Ron Kalifa, has been a Uncertainties section of the Strategic in the workforce engagement member of the Remuneration Report. The Board ensures that section on page 62. Committee throughout the year, but there is effective engagement as he is not independent, he could with shareholders and other key › For the period 1 to 21 January 2020, not be counted towards the stakeholders, including the the Company did not comply with minimum membership of three. workforce, and receives regular provision 11 (at least half the Board, On 1 January 2021, two newly reports at its meetings so it excluding the Chair, should be appointed Independent Non- understands the views of those Independent Non-Executive Executive Directors joined the parties. The Board regularly assesses Directors) and provision 24 (Audit Board and one of those Directors and monitors the culture of the

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Corporate Governance Report continued

The Group’s governance structure

The Board Board responsibilities and activity reported on pages 102 to 105

Audit and Risk Committee Nomination Committee Remuneration Committee Committee report on page 115 Committee report on page 128 Committee report on page 132

Executive Management Team See pages 97 to 98

Enterprise Risk Management Committee See page 112

organisation so it can satisfy itself behaviours of each Board member, Diversity and Inclusion Policy, that the Company’s values and both in formal meetings and regular all of which reinforce the Group’s culture are aligned with its long- engagement with employees and commitments to employees. term sustainable future. Further other stakeholders across the The Board assesses and monitors information in these vital areas is business, are aligned and are culture in a variety of ways including: given throughout this report and consistent with the values set out feedback from employee focus the Strategic Report. in the Code of Conduct. The Code groups and surveys; reports from the expects high standards of integrity HR, Risk, Compliance and Internal The Group’s purpose, business along with professional and personal Audit functions, including reports of model and strategy behaviour within and outside all matters raised under the Group’s The Board is responsible for working hours in a manner that Whistleblowing Helpline and the way establishing the Group’s purpose, protects the Group’s reputation in which management has addressed business model and strategy, which and its interests. all issues raised; reports from the are described on pages 10 and 18 Significant progress with our People external auditors; and face to face within the Strategic Report of this agenda has been achieved during meetings and meetings with the Annual Report and Accounts. 2020, as described in the Responsible direct reports of senior management Business section of the Strategic in the absence of those senior The Group’s values and culture Report on pages 60 to 65. Despite management. At each of its The Board has endorsed and COVID-19 related challenges, meetings, the Board reviews and continuously applies a Code of the CEO, with the support of his discusses the CEO’s report, which Conduct that is available on the executive colleagues, continues to includes a comprehensive section Company’s website at https:// take the necessary steps to ensure on progress with the People agenda, investors.networkinternational.ae/ this culture remains embedded including employee health and investors/corporate-governance/. across the organisation, including well-being, COVID-19 safety, working The Code of Conduct requires through regular training programmes, from home arrangements and the everyone at every level across the internal communications and additional support given to facilitate organisation, including the Directors, reminders at team meetings. this, regular communication and to act ethically and in compliance engagement (enhanced during 2020 with all applicable laws and The Board acknowledges the as the majority of employees have regulations. Furthermore, this code continued focus on employees to been working from home), the roll requires all Directors and employees inspire them to stay and grow with the out of the new Learning and to act in the best interests of the Company through the development Development Charter (introduced Company and shareholders, and to of an engaging “Great Place to Work” in response to employee feedback act professionally, exhibiting high and the introduction in 2019 of a new in the 2019 engagement survey), levels of integrity and commitment. Talent Management Framework and and community support initiatives. Under the leadership of the an Employee Charter, and in 2020 of The Board is greatly encouraged Chairman, the Board ensures that a new Learning and Development by the investment in our people as all decisions taken by it and the Charter and the updated Equality

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 101

described on pages 60 to 65 and Officer for action. All matters raised engagement does not apply directly the 8-percentage point improvement through the helpline are investigated to the Company as it employs fewer in overall employee engagement thoroughly and, regardless of the than 250 employees in the UK. in 2020. outcome, formally reported to the However, the Board believes it is Audit and Risk Committee. The Chair important to be progressive and The Company’s culture was enhanced of the Audit and Risk Committee embrace the spirit of this regulation, during 2020, in part as a result of presents his report to the Board on as it regards the wider workforce the considerable progress made the proceedings at each Audit and as key stakeholders and therefore embedding our new ERMF, which is Risk Committee meeting, and if any it is imperative to engage on matters more fully described in the Audit and matters have been raised through that concern them. Risk Committee section of this report the helpline, the same are brought to on pages 115 to 127, and in the Principal To this aim, there are solid and the Board’s knowledge. To support Risks and Uncertainties section of the effective levels of bilateral the Board’s work in assessing culture Strategic Report on pages 72 to 89. engagement that continue as described above, and at the The ERMF is reinforced by and between Executive Directors, senior direction of the Audit and Risk complements other relevant policies management, and the wider Committee, Group Internal Audit and formal regulatory and compliance workforce, as described in this conducted a review of the Group’s training programmes including in Corporate Governance Report and whistleblowing arrangements relation to securities dealing (in line within the Responsible Business towards the end of 2020. Their with the Market Abuse Regulations), section of the Strategic Report findings were positive in respect of the avoidance of conflicts of interest, on pages 62 to 63. For example, the measures taken by management anti-fraud, anti-money laundering, employees’ concerns and to increase whistleblowing awareness anti-bribery and corruption, suggestions can be raised through and training amongst employees competition, data protection and a host of communication channels (which resulted in staff increasingly information security, business across the Group such as direct and using the whistleblowing framework continuity, disaster recovery, and indirect engagement with the CEO to highlight important areas for health and safety. via a dedicated “Ask Nandan”, management to review and address previously “Ask Simon”, email Participation in these mandatory as appropriate) and the way in address, “Coffee with Nandan”, training programmes and compliance which issues were dealt with by previously “Coffee with Simon”, and with their requirements is regularly management and the flow of townhalls. Additionally, this year reviewed by the Group’s Executive information to the Audit and a number of remote engagement Management Team (Network Risk Committee. A number of initiatives were regularly held to Leadership Team) and the Board recommendations were made ensure we significantly enhanced to ensure that a positive culture is by Group Internal Audit (‘GIA’) and our two-way communication with maintained across the organisation. adopted by management to enhance employees during this difficult The Board believes that the culture the whistleblowing framework, year (please see pages 62 and 63). is aligned with, and will continue to including confirming the Senior The Board is also pleased that evolve alongside, the Company’s Independent Director’s role as workforce engagement was further purpose, values and strategy. the Whistleblowers’ Champion, encouraged during the year through completing the roll out of the implementation of the new Whistleblowing screensaver communications to Employee Charter, which further The Group encourages its employees all remaining employees, including encourages the involvement and at every level to communicate questions in future Employee participation of employees in the any concerns they have through Engagement Surveys about Company’s performance. a variety of channels, including awareness and willingness to report employee forums, team meetings, issues, revising the Whistleblower’s During the year, the Board line management or HR. In addition, Policy so it now explicitly applies established a formalised approach the Company has in place a to the Company’s external parties to reviewing all our workforce whistleblowing or ‘speak up’ policy, such as vendors and customers engagement mechanisms through which allows employees to raise and adding a link to the Company’s the Remuneration Committee, which matters in confidence should they website so that external reports its findings to the Board. not wish to raise them through any whistleblowers can report issues of In addition, the views of our people of the above channels. This includes concern via the dedicated hotline. and initiatives taken by management, a dedicated hotline established for as it drives implementation of the this purpose, which is operated Workforce engagement Company’s new Employee Charter, confidentially by an experienced The Board acknowledges that are summarised within the CEO third-party service provider. the Company does not meet the report, and presented to each Concerns raised through the hotline qualifying criteria to report on some Board meeting. Furthermore, all are sent simultaneously to the Senior of the recently introduced legislation whistleblowing issues and the way Independent Director and Chair in The Companies (Miscellaneous in which they are being resolved of the Audit and Risk Committee Reporting) Regulations 2018. are reported to the Audit and for information and the Chief Risk Specifically, reporting on employee Risk Committee.

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Corporate Governance Report continued

Although the COVID-19 situation in contact major shareholders as soon investors/corporate-governance/ 2020 has made this significantly more as this Annual Report and the notice and has a formal structure of difficult, our Non-Executive Directors convening the AGM are published to delegated authority, whereby normally have many opportunities re-introduce herself in case they wish specified aspects of management to meet with employees at all levels, to raise any questions or concerns and control of the Group have been often without the employee’s manager ahead of lodging their proxy votes. delegated to the Board Committees being present. The Board believes that and the Chief Executive Officer. The AGM provides an opportunity the Group’s employee engagement The Executive Management Team for shareholders to vote on a range mechanisms are highly effective and the regional operating divisions of issues either by proxy and/or in and appropriate as they encourage support the Chief Executive Officer person, when they can ask questions dialogue between the executive and in his day-to-day management of of the Board members including the employees and provide opportunities the Group’s affairs. The Board has Chairs of the Board Committees. for employees to raise issues via many approved the terms of reference for In view of the COVID-19 situation avenues and the Board has visibility the Audit and Risk, Nomination and and the Stay At Home Measures of the activity and progress. Remuneration Committees and the introduced by the UK Government role and responsibility documents for Shareholder engagement in March 2020, the Board conducted the Chairman, Chief Executive Officer The Board has continued with its the AGM held on 30 April 2020 as and the Senior Independent Director, engagement with our investors, a hybrid meeting, thereby enabling all of which can be found on the which it considers vital to create shareholders to participate fully by Company’s corporate website. a mutual understanding of views. electronic means. The powers of the Directors are set Regular meetings have been held The Company uses its website and out in the Company’s Articles of with our major shareholders led email as its primary means of Association, which are also available by our Chief Executive Officer and communication with shareholders. on the Company’s corporate website. Chief Financial Officer; the Chairman The Annual Report, announcements has met with shareholders on In line with its schedule of matters of results and other matters and matters of governance and broader reserved, the Board is specifically general information can all be found strategic topics; and the Chair of responsible for: on the Group’s website https:// the Remuneration Committee has investors.networkinternational.ae/ engaged with shareholders to discuss › Strategy, including: investors/. Enquiries from shareholders our approach to Remuneration Policy can be addressed to the Group’s – Responsibility for the overall and practice. More information on our investor relations function through management and oversight shareholder engagement is disclosed the contact provided on the of the Group; within the Strategic Report on page Group’s website. – The approval of the Group’s 29, in the Chairman’s Governance strategic aims and its business Letter on page 90 and in the Other key stakeholder engagement plan, and the review of the Remuneration Committee Chair’s The Board also recognises the Group’s performance in the letter on page 135. Regular importance of continuous light of these; feedback of these meetings engagement with the Company’s – Setting the Company’s values is given to the Board. other key stakeholders and ensures and standards; and In addition, our brokers and our that formal programmes are in place – Approval of the extension of Investor Relations team provide to ensure that management fully the Group’s activities into new regular reports to the Board of understand the requirements and business outside the Group’s investor perceptions of the Company views of the stakeholders including existing business or geographic in relation to strategy, performance, customers, suppliers, and regulators. areas, or the cessation of governance and remuneration. These Regular feedback from stakeholders, any material part of the reports also include commentary backed by KPIs, is given to the Board Group’s business. on market expectations, share price and its Committees by the CEO (for performance, market trends and example, a comprehensive section › Capital and structure, including: feedback from investors and sell on customers is included in all CEO – Changes to the Group’s capital side analysts. reports to the Board) and other structure, including the issue senior management. More The Group Company Secretary, and buy-back of any securities; information on key stakeholders who acts as the first point of contact – Material changes to the Group’s and engagement is available in in respect of governance related corporate structure, the Group’s the Strategic Report at page 20. matters, shall maintain contact with management or control each of our major shareholders to structure; and Matters reserved for the Board enquire whether they would find it – Changes to the Company’s The Board has a schedule of matters helpful to deepen their ongoing listing or status as a plc and reserved for its approval, which engagement by meeting with either recommendations to alter the can be found on the Company’s the Chairman and/or the Senior Articles of Association, registered corporate website at https:// Independent Director. She will also office or name of the Company. investors.networkinternational.ae/

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› Board, Committee and other › Engagement and communication – Approval of the risk management appointments: with shareholders and other and internal control framework; stakeholders: – Monitoring and, at least annually – Changes to the structure, size and reviewing the effectiveness and composition of the Board, – Ensuring effective engagement of the system of risk management including the specific roles of with the Group’s shareholders and internal control. Chairman, CEO and Senior and other stakeholders, including Independent Director, following the workforce, in order to › Policies: recommendations from the understand their views; Nomination Committee, and – Convening of all general – Approval and oversight of determining the division of meetings of shareholders and material policies and procedures responsibilities of those roles, approval of resolutions proposed of the Group. which should be set out in writing; to those meetings; and – The terms of engagement – Approval of all circulars, Board activity during the year and remuneration of the prospectuses, listing particulars At each Board meeting, the Non-Executive Directors; and market announcements Chief Executive Officer presents – Proposals for the re-election concerning matters decided a comprehensive update on the of Directors by shareholders by the Board. strategy and business performance at the AGM; across the Group and the Chief – Proposals for the appointment, › Contracts: Financial Officer presents a detailed re-appointment or removal of analysis of the financial performance, – Approval of any transaction the external auditors; both at Group and operating that would be required by – Establishing the Board’s segment levels. This year, both the the UK Listing Rules to be Committees, including the CEO and the CFO have also apprised announced to the market; chair and composition of the Board on the impact of the – Approval, amendment or those Committees; COVID-19 pandemic on the Group’s termination of any commitment – Succession planning for all Board business, customers, people and or arrangement (or series of and senior management roles; finances, and the steps taken to such matters) with a value of – The appointment and removal minimise the pandemic’s impact. greater than USD 20 million; of the Chief Executive Officer In view of the critical importance – Any proposed acquisition or and the Company Secretary; to the Group’s business, the Board disposal of shares in a listed – Appointments to the boards of reviews progress reports on the roll company; and principal operating subsidiaries; out of our highly secure Android – Any binding commitment to and based payment platform N-Genius™, enter into a material strategic – Delegated authority to Directors new markets, new avenues with alliance, joint venture, partnership and senior management. existing customers, progress with or profit-sharing arrangement. new key customers, and acquisition › Remuneration: opportunities. This is in addition › Capital expenditure and financing: to the regular in-depth review of – Determining the Group’s – The approval of investments these platforms and cyber security Remuneration Policy, including and capital projects, borrowings, conducted by the Audit and Risk the approval of share plans and indemnities and guarantees Committee. The Board continuously pension plans; and for an amount in excess of reviews the Group’s strategy at each – The approval of any large-scale USD 20 million; of its meetings and, in addition, holds redundancy programmes. – The creation of any mortgage, one dedicated two-day strategy charge or pledge etc. over all or meeting each year. Executives below › Financial and reporting: part of the Company, its assets Board level attend relevant parts – Approval of the Annual and uncalled capital; and of Board and Committee meetings Report and Accounts, and – The issue by any member of the in order to make presentations and the preliminary and half year Group of any debt instruments answer questions on their area of results announcements; in excess of USD 20 million. responsibility. This gives the Board – Approval of the annual budget, access to a broader group of capital and revenue expenditure › Corporate Governance: executives and senior managers over the limits delegated to and helps the Directors make – Approval and oversight of the management, estimates and assessments when considering Group’s Corporate Governance forecasts made public; the Group’s succession plans. arrangements. – Approval of the dividend policy, declarations of interim dividends › Internal control: and recommendations of final dividends; and – Approval of the Group’s risk – Approval of and changes to appetite and appropriate accounting and tax policies. policies on and systems of risk management and internal control;

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Board activity during the year

At its meetings during 2020, the Board discharged its responsibilities, and in particular it reviewed:

Strategic Operational Business and Reporting › Annual strategic › Macroeconomic › CEO reports at financial › Review and review perspectives each Board performance approval of the meeting 2019 ARA and › Feedback from › Opportunities Ongoing review › the 2020 H1 the annual under the › DPO integration of the business, results, and all strategic review strategic planning customer, statements and and discussion partnership and progress people and confirmations with Mastercard reporting financial risks of › M&A pipeline therein – commercial the COVID-19 and specific › Roll out of our agreement situation › Review and M&A proposals, highly secure signed in 2019 approval of including the Android based CFO reports › Regulatory acquisition of › Development payment at each Board News Service DPO Group and strategy platform meeting announcements, support N-Genius™ › Placing of Financial including trading presentations › equity shares › Implementation forecasts updates, issued of the new to the market › Product Annual budget Enterprise Risk › overview Management and outlook Framework › Separation from ENBD › Approval of capital projects requiring Board approval under the Delegation of Authority

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Internal Shareholder Directorate Governance control and › Appointment of › Composition of › Meetings and risk stakeholder two Independent the Board’s between the NEDs in January Committees Chairman and Enterprise Risk oversight › 2020 upon the the Independent Management › Reports from strengthening NEDs Framework › Acceptance of Investor Relations of the Board the resignation › Governance Review of and brokers during the year › of three NEDs enhancements principal risks › Ongoing in April 2020 › Approval of in compliance › Risk appetite oversight of matters with the 2018 › Appointment of progress with recommended UK Corporate Annual review of a new Executive › the Group’s by the Board’s Governance internal control Director in June People agenda Committees Code 2020 › Annual review › Ongoing › Notice of the of viability › Appointment of oversight of 2020 Annual two Independent the corporate General Meeting NEDs in January culture and and subsequent 2021 review of the review of the 2020 Employee › Oversight of voting results Engagement the work of the of that meeting Survey results Nomination › Policy and Committee in › Engagement insurance respect of the with the approvals Company’s other search for a new stakeholders Group CEO prior › Board including to the retirement effectiveness Mastercard and of Simon Haslam review customers

We have developed a comprehensive programme of work to ensure we cover the breadth of responsibilities and duties of the Board, and each of its Committees, and to allow executive management to plan and resource their support work.”

Ron Kalifa OBE Chairman

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Effectiveness of risk management The Chairman Under the Relationship Agreements and internal control systems The Chairman leads the Board and is between the Company and ENBD, Each year, the Board, through the responsible for its overall effectiveness and the Company and WP/GA, work of the Group Audit and Risk in directing the Company. Ron Kalifa ENBD had the right to nominate Committee, conducts a review of the has been the Chairman throughout for appointment up to three Non- effectiveness of the Group’s system the year. He was independent on Executive Directors, and WP/GA of risk management and internal appointment in March 2019. had the right to nominate for control in line with the FRC Guidance appointment up to two Non- The roles and responsibilities of the on Risk Management, Internal Control Executive Directors to the Board in Chairman and Chief Executive and Related Financial and Business accordance with the terms of their Officer are separate and distinct and Reporting. The Board approved respective Relationship Agreements. have been clearly set out in writing the Enterprise Risk Management and approved by the Board. These During November 2019, consequent Framework in early 2020 and has documents can be found on the to each of ENBD and WP/GA monitored its implementation Group’s investor website at https:// reducing their percentage holding throughout the year. There is an investors.networkinternational.ae/ of voting rights in the Company, the ongoing process for the identification investors/corporate-governance/. Relationship Agreements with them and evaluation of risk management automatically terminated, and they and internal control processes. For The Senior Independent Director ceased to be entitled to nominate example, as a result of the COVID-19 Darren Pope has been the Senior Non-Executive Directors for pandemic, a temporary principal Independent Director throughout appointment to the Board. The risk was created in spring 2020 to the year. The Senior Independent Company did not immediately understand and monitor the impact Director is available to shareholders exercise its right to procure the of the pandemic on the Group’s should they have concerns that resignation of ENBD’s or WP/GA’s risk profile. The work conducted cannot be resolved through the nominated Directors, on the grounds by management is complemented, normal channels involving the Chief that in the first year of operation as a supported and challenged by the Executive Officer or the Chairman. listed company, the skills, knowledge controls assurance work carried out The Board-approved Role and and experience of Shayne Nelson, independently by the Group Internal Responsibilities of the Senior Suryanarayan Subramanian, Aaron Audit function. Regular reports on Independent Director are set out Goldman and Daniel Zilberman and control issues are presented to the in writing and can be found on the the contribution of each to the Audit and Risk Committee by the Group’s investor website at https:// deliberations of the Board continued Chief Internal Auditor. The Board, investors.networkinternational.ae/ to be important. in reviewing the effectiveness of investors/corporate-governance/. the system of risk management Three of the four shareholder and internal control, can confirm nominated directors, Shayne Nelson, CEO succession that necessary actions have been Daniel Zilberman and Aaron Goldman, Following a thorough process and or are being taken to remedy any resigned from the Board at the global leadership search conducted significant failings or weaknesses Company’s first Annual General by the Nomination Committee, and identified from that review. Further Meeting on 30 April 2020. The upon its recommendation, the Board details of the ERMF can be found remaining Director Suryanarayan appointed Nandan Mer as Group on page 73. Subramanian, at the Company’s CEO with effect from 1 February request, has continued as a Board 2021. This followed Simon Haslam’s Board composition member in order to provide support decision to retire from the Company As at 31 December 2020, the and continuity, given his long-standing after 40 years in the financial Board comprised the Non-Executive experience with the business and services industry. Simon stepped Chairman (independent on market, and his financial expertise. For down as Group CEO on 31 January appointment), two Executive these reasons, Mr Subramanian was 2021 and remains with the Company Directors, five Independent Non- invited to attend the Audit and Risk throughout his six-month notice Executive Directors and one non- Committee meetings throughout the period to ensure a smooth transition. independent Non-Executive Director. year. From the start of 2021, he was The biographical details of each of invited to attend the meetings of both Board and Committee membership, the current Directors can be found on the Audit and Risk Committee and appointments and diversity pages 94 to 96 and on the Group’s the Remuneration Committee. He is Following the IPO, ENBD and investor website at https://investors. not a member of those Committees, WP/GA continued to be significant networkinternational.ae/who-we-are/ does not receive any additional fee shareholders in the Company, with leadership/board-of-directors/. for his attendance, has no voting each entering into a Relationship rights and is not counted towards the Agreement with the Company quorum. ENBD has since, by its letter on 1 April 2019. dated 16 July 2020, confirmed that Suryanarayan Subramanian does not represent ENBD’s interest on the Company’s Board.

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With the advice of the Nomination breach of that duty if the relevant › Habib Al Mulla is the Executive Committee, the Board appointed matter has been authorised in Chairman of Baker McKenzie Habib Anil Dua and Ali Mazanderani as accordance with the Articles of Al Mulla, Chairman of the Board of Independent Non-Executive Directors Association. Such a decision to Trustees of the Dubai International with effect from 22 January 2020, authorise a conflict of interest can Arbitration Centre and is a UAE Rohit Malhotra, Group Chief Financial only be made by Directors who do lawyer with over 30 years’ Officer, as Executive Director, with not have any interest in the matter experience. As the head of Baker effect from 2 June 2020, and Diane being considered. McKenzie Habib Al Mulla’s Disputes Radley and Monique Shivanandan as practice, Habib Al Mulla may The Nomination Committee also Independent Non-Executive Directors occasionally be contacted by reviews the interests of candidates with effect from 1 January 2021. As at ENBD in the context of providing prior to making recommendations the date of this report, the ratio of general advice or clarification in to the Board for the appointment Independent Non-Executive Directors his area of expertise but in the of new Directors. The Nomination (excluding the Chairman) to other vast majority of engagements Committee and the Board applied Directors is 7:3 which continues to be other partners from within Baker the above principles and process in compliance with the requirements McKenzie Habib Al Mulla have throughout the period to the date of the Code. ultimate responsibility for the of this report and confirm these relevant engagement. Habib Al The composition of the Board’s have operated effectively. Mulla has himself never had a Committees was further strengthened business relationship with the Vice during year and to the date of this External appointments Chairman of ENBD nor with ENBD. report by the appointment of four The Directors are required to first additional Independent Non- seek and obtain the approval of the Habib Al Mulla had confirmed to the Executive Directors as detailed above. Board before accepting any other Board that he was not acting for or significant appointment. The Board with ENBD and shall at all times act The current compositions of the will only grant approval if it is satisfied independently without influence Board’s Committees and the changes that the proposed appointment from the Vice Chairman of ENBD made during the year are shown in would not give rise to a conflict of or ENBD. the relevant Committee sections on interest and the Director in question pages 92 to 93. The search, selection On the basis of the above, the Board has given assurance that they expect and appointment process for Non- had concluded that Habib Al Mulla to be able to devote sufficient time Executive Directors is shown in the is independent, as defined in the UK to meet their Board responsibilities. section on the Nomination Corporate Governance Code. Committee on page 128. Confirmation of Director Confirmation of the Chairman’s When considering the appointment independence independence on appointment of new Independent Non-Executive At its meeting on 7 March 2021, As disclosed in paragraph 6.8 Directors, the Nomination Committee as part of a thorough review of on page 201 of the Additional and the Board have regard to its Corporate Governance against the Information Section of the Prospectus Board Appointments Policy, which Code, the Board considered the published prior to the IPO, Ron Kalifa provides for diversity across a independence of the Non-Executive was an Executive Director of range of attributes, including skills, Directors. In doing so, they considered Worldpay until May 2019. In March knowledge and experience, gender the criteria set out in provision 10 2019, Fidelity National Information and ethnicity, to meet the needs of the Code amongst other matters Services, which is one of the Group’s of the business. and determined that six of our competitors, announced a merger Non-Executive Directors, namely The Board Appointment Policy can with Worldpay (which completed Victoria Hull, Habib Al Mulla, Darren be found on the Group’s investor in July 2019). Notwithstanding this Pope, Anil Dua, Ali Mazanderani, website at https://investors. situation, the Board determined Diane Radley and Monique networkinternational.ae/investors/ at the time that Ron Kalifa was Shivanandan were independent. corporate-governance/. independent on appointment In reaching the above determination as Chairman of the Company. Directors’ conflicts of interest of independence, the Board The UK Companies Act has codified considered the following (which The other Non-Executive Directors the Directors’ duty to avoid a conflict was fully disclosed in paragraph Of the Directors who held office situation in which they have, or can 6.9 on page 201 of the Additional during the year: have, an interest that conflicts, Information Section of the Prospectus or possibly may conflict, with the published prior to the IPO): › Shayne Nelson, Aaron Goldman interests of the Company. The Board and Daniel Zilberman stepped › Habib Al Mulla is related to the has established a process to identify down as Directors of the Company Vice Chairman of ENBD, by virtue and authorise conflicts. Directors from the date of the first Annual of being married to the Vice have to notify the Group Company General Meeting of the Company Chairman of ENBD’s sister; and Secretary as soon as they become on 30 April 2020; aware of actual or potential conflict situations. A Director will not be in Network International Holdings Plc Annual Report and Accounts 2020 108

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› Suryanarayan Subramanian, who There is a thorough induction Operation of the Board and was nominated for appointment programme for newly appointed its Committees to the Board pursuant to the Directors and this can be tailored The Board and its Committees each relationship agreement between to meet individual needs. Overall, have a schedule so they can operate the Company and ENBD, continued the aim of the induction programme effectively, ensure comprehensive as a Director. He has informed is to introduce new Directors to: coverage of their responsibilities, and the Board that, with effect from allow executive management to plan › The nature of the Company, its 1 January 2020, he no longer holds and resource their support work. purpose, values and strategy, its the position of the Group Chief Prior to scheduled meetings, the businesses, the markets in which it Financial Officer of ENBD. ENBD Chairman (or Committee Chairman), operates, its challenges and risks; has also informed by its letter dated with the support of the Group 16 July 2020 that Suryanarayan › The legal and regulatory Company Secretary, liaises with the Subramanian does not represent environment in which the Executive Management Team to fine ENBD’s interest on the Company’s Company operates; tune and finalise the agenda. The Board. Accordingly, the Board Chairman, CEO and Group Company › The Company’s relationships acknowledges that in accordance Secretary review the papers for with its main stakeholders and with provision 10 of the Code, the meeting and these are then how these are managed; and Suryanarayan Subramanian circulated to the Directors one week cannot presently be regarded as › The organisation’s culture; prior to the meeting. The Directors independent, but is satisfied that and to build a link with the have access to a fully encrypted since 1 January 2020, there is no Company’s people. electronic portal system, which ongoing conflict of interest. allows them to receive and review Inductions will typically include papers quickly and securely on a Re-appointment of Directors meetings with members of the tablet or PC. Due to the impact In accordance with the Code and the Executive Management Team, and of the COVID-19 pandemic, most Company’s Articles of Association, other senior management, both at of the scheduled Board meetings every Director shall be subject to Group and the operating divisions, during the year were held through annual re-election by shareholders at where they receive thorough video conference. each Annual General Meeting. The briefings aligned with the aims set Notice convening the Annual General out above. Individual induction At scheduled Board meetings, the Meeting to be held on 20 May 2021 requirements will be monitored by Chairman meets with the Independent sets out, in respect of each Director the Chairman, with the support of the Non-Executive Directors in the standing for re-election, the specific Group Company Secretary, to ensure absence of the other Non-Executive reasons why their contribution is, that newly appointed Directors gain Directors, CEO and the CFO. and continues to be, important to sufficient knowledge about the The Group Company Secretary, the Company’s long-term success. Group to enable them to contribute who was appointed by the Board, to the Board’s deliberations as swiftly acts as secretary to the Board and Board development and induction as possible. The induction process its Committees, and works with Throughout the year under review, has evolved as the experience of the Chairman and the Executive the Board reviewed a series of inducting each new Director is Management Team as described development and strategy support built upon. above to ensure there is a smooth presentations at each of its meetings. flow of information and attends The induction programmes for This series, together with ongoing each meeting. The Group Company Anil Dua and Ali Mazanderani were business reviews, was designed to Secretary is also responsible conducted in line with the above and ensure that the new Directors gained for advising and supporting included extensive engagement a high level of knowledge about the the Chairman, the Board and meetings with many members of the Group so that all Directors could its Committees on Corporate management team in the areas of contribute to the Board’s ongoing Governance matters. All Directors HR, Product, Technology, Operations, review and development of strategy. have access to the advice and Audit, Risk, Strategy and Finance. services of the Group Company At Board meetings and, where These induction meetings were well Secretary, and through her, have appropriate, Committee meetings, received, not just by the Directors, access to independent professional the Directors receive updates but also by the members of the advice in respect of their duties, at and presentations on business management team who gained first the Company’s expense. Jay Razzaq developments. In addition to gaining hand exposure to new members has held the position of Group a better understanding of those of the Board. As of the date of this Company Secretary from businesses, these programmes also report, the induction programmes 27 February 2019. Her biographical increase the exposure of senior of Diane Radley and Monique details can be found on page 97. talent to the Board and also the Shivanandan are well advanced. Board’s presence across the Group.

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Board Observer Under the Cornerstone Agreement signed by the Company with Mastercard at the time of the IPO, Mastercard is entitled to appoint an Observer to the Company’s Board for so long as Mastercard does not dispose of the shares acquired by it. The Observer may attend all Board meetings and receive all Board papers, but may not vote at Board meetings. As per the terms of the Cornerstone Agreement, the Observer is excluded for matters where a conflict arises or where the matter is considered to be commercially or legally sensitive. The first Observer is Mr Raghu Malhotra.

Board meetings and attendance The Board and its Committees have regular scheduled meetings throughout the year and supplementary meetings are held as and when necessary. The table below shows the number of scheduled Board and Committee meetings attended by each Director out of the number convened during the year 2020. Non-attendance at one Board meeting each by Dr. Habib Al Mulla and Ali Mazanderani was due to prior overseas travel commitments which were unavoidable. Each of the Directors has given a firm commitment to being able to give sufficient time to enable them to fulfil their duties, including attendance at meetings, in 2021.

Individual Director attendance at scheduled meetings during the year 2020

Audit and Risk Nomination Remuneration Name Board Committee Committee Committee No. of meetings held 7 7 2 5 Ron Kalifa 7/7 1/1* 2/2 5/5 Simon Haslam 7/7 – – – Darren Pope 7/7 7/7 2/2 2/2* Victoria Hull 7/7 7/7 2/2 5/5 Habib Al Mulla 6/7 – 2/2 2/2* Suryanarayan Subramanian 7/7 – – – Anil Dua 7/7 7/7 – – Ali Mazanderani 6/7 4/4* – 4/4 Rohit Malhotra 4/4** – – –

* Not a member for the entire year. Please refer to the respective Committee reports for more details. ** Rohit Malhotra joined the Board on 2 June 2020.

Attendance at scheduled meetings during the year 2020 by former Directors who resigned with effect from 30 April 2020

Audit and Risk Nomination Remuneration Name Board Committee Committee Committee No. of meetings held 3 – – – Shayne Nelson 2/3 – – – Daniel Zilberman 3/3 – – – Aaron Goldman 2/3 – – –

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Board effectiveness evaluation The Board recognises the benefit of a thorough evaluation process to reflect on the Board’s strengths and the challenges it faces, and to identify opportunities to continuously improve effectiveness. Our Board evaluation process in 2020: 1. The Board agreed to have an externally facilitated Board effectiveness review conducted in 2020. 2. Discussions were initiated with three reputed external agencies shortlisted for carrying out the Board effectiveness evaluation, and Egon Zehnder were selected. 3. The Chairman discussed and agreed the scope of the evaluation with Egon Zehnder. Separately, the Senior Independent Director led the evaluation of the Chairman. 4. Egon Zehnder conducted individual private interviews with each of the Directors and other Board attendees (see below). They also reviewed Board and Committee agendas, papers and minutes. 5. Egon Zehnder prepared a report of their findings from the review, identifying strengths, challenges and opportunities to improve and embed higher performance. 6. Egon Zehnder’s report was first shared with the Chairman and the SID and then presented to, and discussed by, the Board, which agreed an action plan to enhance Board effectiveness for the year ahead. 7. The action plan will be continually monitored by the Chairman with the support of the Company Secretary. 8. The Board evaluation to be conducted in 2021 will be carried out internally but will reflect on the actions from the 2020 external review.

Process and context A thorough evaluation of the Board and its Committees was conducted by Egon Zehnder and the table above explains the process undertaken over a two-month period in the autumn of 2020.

Egon Zehnder was appointed in view of their specific knowledge of the Board and to align the review work with their assignment in respect of the CEO succession process and the search for additional Independent Non-Executive Directors. Egon Zehnder also conducted the search resulting in the appointments in January 2020 of Ali Mazanderani and Anil Dua. See the Nomination Committee report on page 128 for details of the processes in respect of these Board appointments.

The Board determined that the best time to conduct its first effectiveness review would be around 18 months after the formation of the Board (at the time of the IPO), allowing time for the Board to adapt and develop following the changes made to its composition in the first half of 2020. Nevertheless, the evaluation was conducted at a time of transition and significant activity for a new Board in a difficult market, including: the short tenure of most of the Directors; being in the midst of a major acquisition; having to deal with the significant additional business challenges brought about by the pandemic; and being unable to interact face to face as a Board and with management due to the COVID-19 restrictions. A CEO succession process and a search for additional Independent NEDs were also underway at the time the review was conducted.

Private discussions were held between Egon Zehnder and each Director, the Board Observer appointed under the agreement with Mastercard (see page 109 of this Governance Report) and the Chief Risk Officer and Group Company Secretary. These interviews covered Board structure, composition, processes, and behaviours. Individual feedback sessions were offered to the Directors by Egon Zehnder.

The comprehensive report prepared by Egon Zehnder was debated by the Board, which then agreed an action plan for improvement, in February 2021.

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Summary of outputs The Board effectiveness review concluded that the Board was operating very effectively with all members feeling enabled to contribute to the work of the Board and its Committees. The report recognised that there was a good team spirit, engagement, and energy around the Boardroom table (albeit virtual for most of the year); heavy lifting by the Committees allowed the Board to focus on higher level topics and there was a good allocation of time on the agendas; and good resilience had been shown when dealing with the many challenges (as described above). Significant progress had been achieved in many areas supported by the Directors’ high governance standards, led by the Chairman. There is a high degree of confidence in the Chairman, and admiration for the Committee Chairs and the support given by the Company Secretary.

It was recognised that at this stage of the Board’s evolution and in view of the COVID-19 restrictions experienced throughout most of the year, there was opportunity and potential to develop the Board’s effectiveness and Egon Zehnder’s report set out a number of key themes that emerged from their review and set out some clear recommendations for consideration.

The recommendations from the emerging themes focused on developing a more comprehensive set of induction teach in sessions for Directors on various aspects of the business to build on the induction sessions on joining. These were to be delivered through a series of online sessions over a three-month period.

The following table presents a high-level summary of the outputs from the 2020 Board effectiveness evaluation and the actions agreed by the Board.

Outputs from the 2020 Board evaluation Board agreed actions › Conclude the search for two additional › Action completed with the appointment Independent Non-Executive Directors with the of Diane Radley and Monique Shivanandan attributes identified by the Nomination Committee. with effect from 1 January 2021. › Further enhance the induction process (currently › Induction process to be benchmarked against the challenging due to COVID-19 restrictions). FTSE 250 and improvements made as required. › Continued preparation for top bench succession. › Additional Nomination Committee meetings built into the corporate calendar. › Allocate agenda time on: › Board’s forward programme to – People, organisational capability and culture. reflect this recommendation. – Competitive landscape. › Enhance the strategic debate by allocating › Board’s forward programme to time for input by the broader management reflect this recommendation. team and NEDs with specific expertise. › Wider management population to undertake › Training programme developed and being training of FTSE governance requirements rolled out in the first half of the year. and standards – to be reinforced by NEDs with expertise in that area. › Produce clearer and more concise Board › Review of Board materials underway, to materials with more inclusive terminology. be benchmarked against FTSE standards. › Foster stronger relationships to › Directors to arrange virtual sessions among support their Board roles. themselves and members of the Executive Management Team, given the lack of opportunity for physical meetings and Board dinners due to the COVID-19 restrictions.

The Group’s performance management system applies to management at all levels. The individual performance of the Chief Executive Officer is reviewed separately by the Chairman (and of the CFO by the CEO) and by the Remuneration Committee. Further details of the Executive Directors’ performance measures and objectives and their achievement against them are disclosed in the Remuneration Report on pages 139 to 145.

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Management Committees › Enterprise Risk Management › Executive Management Team Committee In addition to the members of the Operating an appropriate and Board, the day-to-day management effective risk management and of the Company’s operations internal control system is essential is conducted by its executive to achieving the Group’s strategic management team called the objectives and maintaining service Network Leadership Team which is delivery targets. The Enterprise Risk made up of the key business heads Management Committee has general of each function, and includes the oversight and sets the ‘tone from the Executive Management Team top’ in respect of risk management. (please refer to pages 97 to 98 It has a mandate to manage and for details). oversee all aspects of operational risk, financial risk, credit risk, fraud The Network Leadership Team risk, compliance, business continuity, is chaired by the Group CEO, and information security governance. and convenes throughout the year based on a series of planned During 2020, the ERMC reviewed meetings. These include a weekly regular reports in respect of the Sunday morning management above areas of its mandate, including meeting which focuses on the Group’s principal risks and new opportunities, risks and challenges; and emerging risks. Additionally, the a monthly management meeting to Committee reviewed specific reports review business performance; and into the Coronavirus Management a quarterly three-day management Response Strategy and impact meeting that goes beyond business assessments on the Group’s performance, and includes specific acquiring portfolio, status updates agenda items such as full day talent on embedding the ERMF, principal management reviews, presentation risk deep dives, IT disaster recovery of business cases and staff testing and analyses of the risks engagement sessions. associated with retargeting the timelines for certain projects delayed Some of the topics discussed and due to COVID-19. agreed at the Network Leadership Team meeting, many of which then The members of the ERMC are as subsequently came to the Board follows: Chief Risk Officer and Group for approval in 2020, included: Company Secretary (Chairperson), Group Chief Executive Officer, Group – Saudi Arabia On-Soil Chief Financial Officer, Group Chief Business Case Internal Auditor, Managing Director – Separation from ENBD Middle East, Managing Director – 2021 budget submission Africa, Group Chief Digital, – Employee Engagement Survey Technology and Operations Officer. Results & Action Plans – Culture The Board’s perspective on Risk & – Net Promoter Score – Results Control is covered in the Principal & Action Plans Risks section within the Strategic Report at page 72 and within the Audit and Risk Committee Report on page 115.

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The evolution of our Board Since our IPO in April 2019, we have carefully managed the construct of our Board to reflect the transition from private equity ownership to that of a UK-listed constituent of the FTSE 250. At Network International, we have been able to attract both Executive and Non-Executive Directors of the highest calibre in line with our exacting requirements. Our Board has a breadth of skills, experience, and knowledge, is diverse by a range of measures, and has a strong cohort of Independent Non-Executive Directors – fully aligned with the requirements of the Code and investor expectations.

Ratio of Independent Directors to other Number of Directors (excluding Date Directorate change Directors the Chairman)* Pre-IPO: February/ Appointment of the first Directors 9 3:5 March 2019 Ron Kalifa, Independent Chairman Simon Haslam, Group Chief Executive Officer Darren Pope, Senior Independent Director Victoria Hull, Independent Non-Executive Director Habib Al Mulla, Independent Non-Executive Director Shayne Nelson, Non-Executive Director Suryanarayan Subramanian, Non-Executive Director Aaron Goldman, Non-Executive Director Daniel Zilberman, Non-Executive Director 22 January 2020 Appointment of two additional Independent 11 5:5 Non-Executive Directors Anil Dua, Independent Non-Executive Director Ali Mazanderani, Independent Non-Executive Director 30 April 2020 Three Non-Executive Directors (nominees of the former major 8 5:2 shareholders) step down at the conclusion of the 2020 AGM. Suryanarayan Subramanian, Non-Executive Director, invited to remain on the Board. Resigning Directors: Shayne Nelson, Non-Executive Director Aaron Goldman, Non-Executive Director Daniel Zilberman, Non-Executive Director 2 June 2020 Appointment of our serving CFO to the Board as an 9 5:3 Executive Director Rohit Malhotra, Group Chief Financial Officer 1 January 2021 Appointment of two additional Independent 11 7:3 Non-Executive Directors Diane Radley, Independent Non-Executive Director Monique Shivanandan, Independent Non-Executive Director 1 February 2021 Succession of the Group Chief Executive Officer 11 7:3 Nandan Mer appointed as Group Chief Executive Officer Simon Haslam retires, remaining with the Company throughout his six-month notice period to ensure a smooth transition

* the Code requires that at least half the Board, excluding the Chair, should be Non-Executive Directors whom the Board considers to be independent.

The current Directors and their biographies are detailed on pages 94 to 96.

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Corporate structure

Network International Holdings Plc

The Links Group (UAE local sponsor) Nominee arrangements for 51% beneficial ownership

51% 49% 100% Legal ownership Legal & 100% beneficial Legal & beneficial through SPV at DIFC1 ownership through ownership through SPV 1 at DIFC11 SPV 2 at DIFC1

UAE business Non-UAE business2

The requirement for a local sponsor The contractual arrangement 27 March 2021, the foreign ownership Currently, UAE law restricts the level with our nominee allows for the restrictions will be abolished, allowing of direct foreign ownership of UAE transfer of the full economic foreign investors to hold 100% of based companies. A UAE company benefit (including all dividends, the share-capital of their onshore or UAE nationals must hold at least distributions and voting rights) companies, subject to exceptions 51% of the share capital. This law over the sponsor’s shareholding for certain strategic commercial regulates legal ownership and not to Network International Holdings activities/sectors. We will evaluate economic ownership. plc, which retains full management the impact of these changes once control over the business. the New Decree is fully enacted. Network’s UAE sponsor On 27 September 2020, the UAE We use the Links Group, which is issued the Federal Decree-Law owned by Equiom Group, and which No. (26) of 2020 (‘New Decree’) provides trust and fiduciary services amending certain provisions of in 15 jurisdictions globally. Links is Federal Law No. (2) of 2015 on generally recognised in the UAE Commercial Companies. The New as one of the leading providers of Decree came into force partially on business formation and corporate 2 January 2021 and repealed the support services, and has provided existing Foreign Direct Investment services to over 350 international law. Once fully enacted on companies since 2002.

1 Special Purpose Vehicle registered at Dubai International Finance Centre Freezone. 2 Includes Jordan, rest of Middle East operations and Africa operations. UAE = United Arab Emirates.

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Audit and Risk Committee Report

Darren Pope Other members Meetings also regularly attended by: Committee Ron Kalifa (until 4 February 2020) › Simon Haslam, Chief Executive Victoria Hull (until 1 January 2021) Officer; since 1 February 2021, Chairman Anil Dua (from 4 February 2020) Nandan Mer, Chief Executive Officer Ali Mazanderani (from 2 June › Rohit Malhotra, Chief Financial Officer 2020 until 1 January 2021) › Suryanarayan Subramanian, Diane Radley (from 1 January 2021) Non-Executive Director Monique Shivanandan › Jay Razzaq, Chief Risk Officer (from 1 January 2021) and Group Company Secretary › Ian Cox, Chief Internal Auditor Number of meetings held › KPMG LLP in the year 7 plus a further 6 meetings to Read Directors’ biographies monitor the human, customer and on pages 94 to 96 financial impacts of the COVID-19 The Board has satisfied itself that situation and management’s a majority of the members of the mitigating actions. Committee have recent and relevant financial experience and the Committee Attendance as a whole has competence relevant Darren Pope (Chair) 13/13 to the sector in which the Company Ron Kalifa 1/1 operates, as required by the Code. Victoria Hull 13/13 Anil Dua 12/13 Ali Mazanderani 5/5

Dear Shareholder risk including key risk indicators, to I am pleased to present the Audit ensure appropriate visibility of the The Committee has focused and Risk Committee report for the various consequences of COVID-19 on monitoring the impact year ended 31 December 2020. and the risk mitigation actions taken. This report describes the work In addition, the Committee asked of the COVID-19 pandemic of the Committee during the year the Chief Financial Officer, Chief Risk on our people, customers, and reports on how we have applied Officer and Group Internal Audit our financial position and the principles and provisions of to pay particular attention to the the mitigating actions section 4 of the 2018 UK Corporate resilience of both financial and Governance Code (‘the Code’) operating controls and performance. taken by management, the relating to audit, risk and internal It is an enormous credit to the team integrity of the financial control. Management and the that, during the year, the business statements, progressing Committee have continued to was able to ensure there was no the implementation of our develop and apply high standards material adverse impact to its people, to ensure that the Group meets business operations, supply chains Enterprise Risk Management the investor and stakeholder or its cybersecurity framework. Framework, reviewing our expectations of a UK listed company. principal and emerging risks, In addition, the Committee undertook COVID-19 a detailed review of a number of risk reviewing our risk appetite, Similar to other listed companies and technology projects and initiatives reviewing the outputs and COVID-19 created new challenges that were being deferred due to performance of our second in the way the Group was required COVID-19 to ensure that, where and third lines of defence, to operate. During the early stages required, appropriate compensating of the pandemic the Committee controls were in place to manage and monitoring our cyber established a new COVID-19 principal any residual risks. and data security protocols.”

Darren Pope Committee Chairman

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Disclosures and year end reporting As part of the ongoing regulatory Assurance During the year, the Committee work of the Financial Reporting We have continued to develop our continued to focus on refining Council (FRC), KPMG were subject to overall assurance approach this year its disclosures to enhance the an FRC quality review of their audit of with a highly integrated plan across transparency of the Group’s external the Group’s 2019 financial statements. Group Risk and Group Internal Audit. reporting. As you would expect for This review detailed on page 126 This plan ensures strong coverage a relatively recently listed entity, we highlighted a small number of findings by both principal risks and operating have listened carefully to the views giving further reassurance to the geographies which, combined of our shareholders as to how we Committee as to the quality of the with assurance activities being could most meaningfully present the work of the auditor. All observations performed by third-party providers, Group’s results for them. The most by the FRC were, in our view, gives considerable assurance to material change has been to move IT not significant and KPMG have the Committee. transformation costs out of Specially implemented all recommendations Disclosed Items. We remain confident into this year’s audit where applicable. Given the nature of the Group’s that this level of core IT spend is business we give considerable focus very unlikely to be repeated in the Internal Audit to cyber risks. We engaged Protiviti, a foreseeable future. The impact of this In the first full year since the third-party consulting firm with deep change is fully reconciled on pages appointment of our new Chief expertise in this area, to undertake 49, 50 and 52 and other less material Internal Auditor, we have seen a a review of existing cyber security enhancements have been outlined significant upskilling of the function maturity in Q3 2018 and, during 2020, on page 120 in this report. including the recruitment of a new we largely completed the agreed Head of Technology Auditor and three-year roadmap to further As you would expect in the current our first use of data analytics to test strengthen our cyber security pandemic, particular attention a full audit population rather than a framework. Protiviti returned in 2020 has been given to viability testing sample. Overdue audit actions remain to validate the effectiveness of the to ensure that the stress testing low, despite the challenges brought enhancements made and we believe applied to the business is sufficient, about by COVID-19, illustrating we have created a defence in depth stretching and that any management the high level of focus on control mode which is now embedded actions deployed are achievable, throughout the organisation. consistently across the Group. We proportionate, and properly costed. While Internal Audit’s reviews have recognise this is an evolving risk which This work excluded the benefit identified improving trends, they we will continue to closely monitor of cash generated from the equity also highlight areas to improve, and to ensure we maintain and where raise to support the DPO Group so we will continue to be focused required improve our cyber defences. acquisition. This work evidenced on monitoring and improving that the business was robust to our control environment where Looking ahead even quite extreme multi-variant applicable. Internal Audit also In the year ahead, we will continue to downside scenarios. introduced an assessment of monitor progress in these important Management’s Control Approach areas with a particular focus on the External auditor (‘MCA’) in 2020 to start assessing completion of the implementation To gain maximum assurance and our risk and control culture and of the Enterprise Risk Management out of an abundance of caution, embedding of the ERMF. Framework and assessing its but in view of the understandable effectiveness as evidence of an market uncertainty with regard to Enterprise Risk Management effective risk culture across the Group. the Wirecard failure, the Committee Framework asked KPMG to increase its revenue Considerable progress was made coverage for 2020 to 97% from on embedding the Enterprise Risk 91% last year and to obtain bank Management Framework during Darren Pope confirmations for all cash balances. 2020 despite certain limitations, Chair, Audit and Risk Committee In addition, the Committee asked including travel restrictions, created 7 March 2021 Internal Audit to complete assurance by COVID-19, with the vast majority work on most of the remaining 3% of the framework components now of revenues not covered by KPMG. implemented. A regular cadence of meetings of management and the Committee are in place to monitor both completion and embedding of the framework. Regular reporting of key risk indicators to the Committee indicate a general trend of reducing risk with the most obvious residual risk being the impact of COVID-19 on the short-term financials.

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Compliance with the Code › Approve the Internal Audit plan, Summary of principal activities Throughout the year, there was full review Internal Audit Reports of the Committee during the year compliance with section 4 of the (ensuring management actions are During the year, the Committee Code, other than in respect of performed without delay), monitor reviewed the following (more detail provision 24 (composition of the and review the effectiveness of the is given on the key matters reviewed Committee) for the period from Group’s Internal Audit function; on pages 119 and 120: 1 January to 4 February 2020 when › Monitor the integrity of the the Chairman of the Company Financial financial statements including a was a member of the Committee. › The integrity of the 2019 full year review of the significant accounting An explanation is given in the results, the 2020 half year results judgements and estimates paragraph below. and in 2021, 2020 full year results contained in them; (including a review of significant Composition of the Committee › Review the content of the Annual accounting judgements and The Audit and Risk Committee is Report and Accounts and assess estimates set out in comprehensive comprised solely of Independent whether it is fair, balanced and reports prepared by the Group Non-Executive Directors. The understandable; CFO) and the processes changes in membership of the underpinning their preparation, › Review the Group’s risk profile, its Committee during the year reflect verification and management principal risks and uncertainties the development of the Board with sign offs; and advise the Board in respect the appointment of additional of risk appetite and the potential › Information in support of Independent Non-Executive Directors. impacts on the Group; statements in the 2019 (in 2021, From the IPO of the Company in in the 2020 Annual Report) April 2019, Ron Kalifa, the Chairman › Review the Group’s internal Annual Report in respect of going of the Board, was a member of the financial controls and the concern, longer-term viability, Committee, given his relevant Group’s internal control and internal control, the report being experience and sector knowledge. risk management systems; fair balanced and understandable He stepped down from the › Oversee the Group’s compliance and disclosure of information Committee on 4 February 2020 and function and review reports from to the auditor. was replaced on the same date by the Chief Risk Officer relating to Anil Dua. Ali Mazanderani joined the › The implementation of the key compliance matters; and Committee on 2 June 2020 and, upon actions arising from the Financial further strengthening of the Board he › Oversee the tax policy and strategy, Position & Prospects Procedures and Victoria Hull stepped down from and the Group’s tax function. risk assessment prepared during the Committee upon the appointment the IPO process; and of Diane Radley and Monique Each year, the Committee reviews its › An annual review of tax compliance Shivanandan on 1 January 2021. terms of reference; no substantive across the Group and the changes were made during the approval of the Group Tax Strategy Role of the Committee year. The Committee has a forward and Policy. The Board has delegated to the work programme and additionally Committee authority to: compares its prior year activities The Committee reviewed the against its responsibilities within the › Establish and oversee the above, challenged management terms of reference to ensure full Company’s relationship with as appropriate and concluded that compliance. To enable it to carry out its external auditor, including the appropriate financial reporting its duties effectively, the Committee monitoring their independence, processes are in place and controls relies on information and support with oversight and approval of are operating effectively. from management across the non-audit work, and approving business as well as a professional the terms of their engagement relationship with the external auditor. and remuneration; The full terms of reference of the Committee can be found on the › Review and approve the annual Group’s investor website at https:// external audit plan; investors.networkinternational.ae/ › Assess the effectiveness of the investors/corporate-governance/. external audit process;

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External audit Risk, controls and compliance Governance › The half year review and annual › Continuing the implementation of › Separate meetings were held in the audit plans and scope, including the Enterprise Risk Management absence of management with the the external auditor’s response Framework, a review of risk Group Internal Auditor, the external to emerging risks in the context appetite and assessment of auditor and the Chief Risk Officer of Network’s business; risk culture; and Company Secretary; › The half year review and full year › A comprehensive review of the › Review of the Financial Reporting audit reports; principal risks and new and Council’s Guidance on Corporate emerging risks, including COVID-19 Reporting; › Reports on auditor independence and the emerging situation – non-audit services and fees; and › Policy reviews and approvals; at Wirecard in the context › The effectiveness of the external of Network’s business; › The review of a number of key audit process. considerations taken from publicly › Assessment of the three lines available information in respect of of defence model; The Committee has reviewed the broader sector and geographic the external audit process, its › Review and approval of the risks including market failures, effectiveness as well as future Compliance Plan, the Group as part of an overall approach plans and satisfied itself with the Risk Assurance Plan and the to improving the management performance of external auditors Coordinated Assurance Plan of risk; and and their independence. for 2021; › Reviewed the Group’s › Regular review of risk and Whistleblowing arrangements, Internal Audit compliance reports; noting the GIA report that the › Approval of a Group Internal key components of an effective Audit charter, aligned and › Reviewed progress of the Cyber whistleblowing framework compliant with the guidance Security road map and emerging are in place (see page 101 for published by the Chartered cyber threats; and more details). Institute of Internal Auditors; › Review of conduct and › Approval of resource enhancements whistleblowing incidents. for Group Internal Audit; The Group’s risk management › The Group Internal Audit plan framework and compliance for 2021; monitoring activities were › The Group Coordinated Assurance appropriately developed and Plan for 2021; and materially effective in the assessment and escalation › The reports from Group Internal of material Group risks. Audit activity.

The Committee concluded that the strengthening of the Group Internal Audit function had resulted in the planned improvement in its effectiveness.

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Key audit and risk matters considered by the Committee during the year:

Key matter considered Committee review and conclusion ERMF implementation Approved by the The Committee: Board in 2019, the › Approved the implementation of the ERMF across the Group and reviewed focus in 2020 was regular progress reports; and to implement and › Welcomed the significant progress of implementing and embedding the embed the framework ERMF; examples of this have been: across the Group. – Constitution of the ERM Committee. The Group risk – Completed all functional risk assessments across the Group. management framework and – Introduced risk and control self-assessment ‘RCSA’ across Group operations. culture remain – Alignment of all risk related policies with the ERMF. central to its success. – Defining corporate risks which act as the bridge between the principal risks and unit level risks. – Applied its ERMF in making sound risk based decisions for strategic projects. – This initiative is ongoing to ensure that an enhanced risk aware culture is firmly embedded throughout the organisation with every employee responsible for the management of risk. Group Internal Audit has tested the embedding process during 2020 and will do so again in 2021. Response to COVID-19 Ensuring the Group’s The Committee: mitigating actions › Established COVID-19 as a principal risk and agreed key risk indicators to were timely and ensure visibility of the consequences of the pandemic and the risk mitigation proportionate actions taken; to the new risks › Held bi-weekly meetings to monitor the Group’s response and workforce that emerged and well-being, and specifically: that impacts on Asked the Group Risk to: stakeholders were › Enhance control framework to support remote working (system access); avoided or mitigated. › Provide additional assurance around vendors; and › Enhance cyber defence monitoring in response to COVID-19. Asked GIA to: › Comment on the risk framework and the process for the inclusion of new and emerging risks. › Consider and report to the Committee on specific new risks including management’s response to COVID-19 with a focus on: (i) The impact on controls due to staff working from home, and (ii) Specific areas of heightened risks such as cyber, credit and fraud. › Reviewed the impact of COVID-19 and management’s response on each of the principal risks – see the Principal Risks and Uncertainties section of the Strategic Report on page 72. Reviewing significant Review Wirecard’s The Committee: events failings to ensure that › Received analyses of the Wirecard situation that could be ascertained all relevant learnings from public sources and reviewed in the context of Network’s business; are considered by › Requested KPMG to: the Board out of an – increase its revenue coverage such that in-scope coverage for the 2020 abundance of caution, Group audit now covers 97% of the Group’s revenue, up from 91% in the to extend KPMG prior year; procedures to give – request independent bank confirmations for 100% of the Group’s cash additional confidence balances; in the reported revenue of Network – include additional granular reporting in the external auditor’s report to the International given BARC at the end of the year, including but not limited to specific details of sector uncertainty. business processes related to merchant acquiring revenue, arrangements with third parties, and bank confirmations as noted above. Asked GIA to consider and report: › With regard to Wirecard, on any enhancements needed to the internal audit approach given the lessons learnt from Wirecard, to ensure that revenue and revenue reconciliation and fraud controls are a priority in all applicable internal audits; › To bring forward the next internal audit of merchant and schemes reconciliation and settlement to Q1 2021, and to complete a thematic review of any revenues not included within the full scope of audits of components performed by KPMG for the external audit.

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Key matter considered Committee review and conclusion Key cyber security Ensuring the Group’s The Committee: enhancements cyber defences › Received regular reports on the remediation status of the Cyber Security are robust and Maturity Assessment plan. maintained in line › Was updated on global threats events and the relevance of these threats with international to the Group. best practices. › Reviewed the progress of key cyber security projects which were planned for 2020 including: – Implementation of Group-wide end-point detection and response (EDR) solution across all end-points and servers to protect against malware attacks. – Implementation of Privileged Access Management (PAM) solutions in Egypt and Jordan locations in line with the standardisation strategy. – Enhanced email protection, phishing triaging and anti-spoofing controls across the Group. – Enhancements in the DDOS protection across the Group including a simulation exercise to test the efficiency of the controls. Proposed DPO The Committee: acquisition › Asked management to develop a separate risk profile of the DPO business to demonstrate how the DPO risk profile could impact the Group’s overall risk profile upon completion of the proposed acquisition. › Asked management to develop a day one operating model for the acquired business to ensure that risk oversight for senior risk managers and the Committee was immediately in place upon completion. › Asked Internal Audit to complete additional independent assurance work over: – the due diligence process used in the potential acquisition of DPO, and the due diligence and risk management information presented to the Board. – the Group’s subsequent risk mitigation and integration programmes in relation to DPO. COVID-19 – impact Ensure loss rates The Committee asked the Risk function to assess (through the development assessment on remained within of stress scenarios) the impact the COVID-19 related restrictions could have acquiring risk appetite. on the Group’s direct acquiring portfolios in UAE and Jordan, with particular focus on delayed delivery merchants’ ability to meet the incoming chargeback and refund liabilities in light of significantly reduced sales volumes. › Periodically reviewed the actual chargeback loss rates against the stress scenarios. Enhanced disclosures Listened to the views The Committee directed that enhanced disclosures be made in the 2020 of shareholders. Annual Report including: › Expanded information on the business model in the Strategic Report (on pages 10 to 11). › Improvements/clarifications to reporting of SDIs and therefore APMs more broadly. › Additional details of the settlement cycle working capital balances, including numeric tables and commentary to explain the cycle itself and the specific balance movements year on year.

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Significant issues considered by the Audit and Risk Committee in relation to the financial statements The key areas of judgement considered, and key conclusions and actions taken by the Committee during the year, which ensure that appropriate rigour has been applied to the 2020 Annual Report and Accounts, are detailed as follows:

Key issue/ area of focus Brief description Committee review and conclusion Consolidated Applicable accounting The Group consolidated financial statements for 2019 were prepared in accordance financial standards. with International Financial Reporting Standards (‘IFRS’) issued by the International statements Accounting Standards Board (‘IASB’) as adopted by EU, in line with the requirement of listing rules. In the 2020 consolidated financial statements, management proposed changing the basis of preparation to: These Group financial statements were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. These Group financial statements were also prepared in accordance with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’). As per the rationale provided by management, this change will allow the Group to continue to avail the exemption available under IFRS 10 ‘Consolidated Financial Statements’ that allows the entities to not prepare the consolidated financial statement at the sub group level (Mauritius, UAE, Egypt level) if its ultimate or any intermediate parent produces consolidated financial statements that are available for public use and comply with IFRS. The Committee reviewed management’s rationale and approved the proposed changes in basis of preparation of the consolidated financial statements as this did not have any impact on the amounts reported or the required disclosures. Accounting, tax To review and challenge The Committee reviewed the process for the production of the reports under the and financial the appropriateness remit of the Chief Financial Officer, and the level of involvement of cross-functional reporting of the contents of the subject matter experts, including monitoring the procedures in place to ensure that Group’s Annual Report all contributors attested to the completeness, accuracy and appropriateness of the and Accounts, disclosures provided. The Committee concluded that the process followed was preliminary results adequate and in line with industry best practices. announcement, interim results announcement, and other trading announcements and investor presentations. Impact of To review the impact The Committee reviewed the update presented by the Chief Financial Officer applicable new of new accounting on the amendments and interpretations applicable for the first time in 2020. accounting standards on the The Committee noted the updates and concluded that these changes do not standards and consolidated financial have any significant impact on the consolidated financial statements. statements. interpretations

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Key issue/ area of focus Brief description Committee review and conclusion Accounting policies To review and challenge The Committee reviewed the detailed update provided by the Chief Financial and practices and the appropriateness of Officer on accounting estimates and judgements used in the preparation of the estimates the Group’s accounting consolidated financial statements and disclosures made to this effect. Other estimates and than those separately discussed in the report, these accounting estimates and judgements. judgements relate to the following items: Critical Accounting Judgement i. Specially Disclosed Items Critical Accounting Estimates › Impairment of goodwill and non financial assets Non Critical Accounting Estimates i. Held for sale classification › Revenue recognition › Impairment of loans and receivables › Employee benefits › Useful life of tangible and intangible assets › Taxes The Committee noted management’s update that these accounting estimates and judgements used in Group’s financial statements for the year ended 31 December 2020 are similar to what was disclosed in 2019 ARA with following changes: › Judgement related to ‘Held for sale classification’ which has been moved from critical judgement area to non-critical as Mercury is no longer treated as ‘discontinued operations’ in 2020. › Accounting estimates related to Employee benefits has been moved to ‘Non- Critical’ because the changes in the relevant assumptions used in estimating the employee benefits obligations is not expected to cause a significant risk of material adjustments to the carrying amounts of assets and liabilities. These accounting estimates and judgements have been applied on a consistent basis in preparation of the 2020 consolidated financial statements and the ARA. The Committee discussed the update provided and concluded that the accounting estimates and judgements are appropriate and that sufficient disclosures have been made in the consolidated financial statements for these items. To review and While computing the alternative performance measures (‘APM’), management challenge the proposed treats certain items of income or expenses that have been recognised in a given changes in alternative period as Specially Disclosed Items (‘SDIs’), which management believes, due to performance measures their materiality and being one-off/exceptional in nature, should be disclosed (‘APM’) used by separately, to give a more comparable view of the period to period underlying management in financial performance. measuring financial In line with the Committee’s continued focus on refining disclosures to enhance performance and the transparency of the Group’s external reporting, during the year, management the disclosures proposed to make some changes in disclosures related to SDIs, whereby certain provided in the items of expenses that were previously included in SDIs will now be considered financial statements. while measuring underlying financial performance. In management’s view these changes are appropriate and necessary to help users of the financial statements to better understand the Group numbers. The Committee noted management’s proposal and after discussion and deliberations agreed with management’s proposal and these changes have been incorporated in the consolidated financial statements and ARA for the year ending 31 December 2020.

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Key issue/ area of focus Brief description Committee review and conclusion Accounting policies To review In line with Committee’s continued focus on refining disclosures to enhance the and practices and management’s proposal transparency of the Group’s external reporting, during the year management estimates continued on additional has proposed to include some additional disclosures and reconciliations in the disclosures to be added consolidated financial statements and ARA for the year ending 31 December 2020 in the financial to make these documents more useful to the reader. These changes broadly related statements and ARA. to the following items: i. Reconciliation of reported operating cash flow to underlying free cash flow ii. Additional disclosures on consolidated and net debt and movements in net debt iii. Analysis of the financing cost iv. Additional disclosures related to working capital v. Reconciliation between capital expenditure numbers appearing in the statement of cash flows, tangible / intangible assets schedule and total capital expenditure appearing in the APM note The Committee noted management’s proposal and, after discussion and deliberations agreed with management’s proposal and these changes have been incorporated in the consolidated financial statements and ARA for the year ending 31 December 2020. To review and Management has historically used underlying free cash flow (underlying FCF) as an challenge the alternative performance measure (‘APM’) to measure the net cash flow conversion alternative performance capability of the Group. In the 2019 ARA, the underlying free cash flow has been measures (‘APM’) used computed without deducting SDIs impacting EBITDA, and adjustment for share by management in of EBITDA and dividend received from associate Transguard Cash. measuring financial In line with common practice across the industry, management proposed to the performance related Committee to deduct the above mentioned two items from underlying EBITDA to to underlying free arrive at underlying FCF as management believes that the revised computation of cash flow. the underlying FCF figure would give a more appropriate presentation of cash flow conversion capability of the Group. Based on the above, the Committee agreed with management’s proposal and concluded that it is appropriate to change the definition of underlying cash flow to be reported in the financial statements for the year ending 31 December 2020. To review and As part of the yearly reporting and closing exercise, management has conducted challenge the and presented to the Committee a detailed assessment on potential impairment impairment analysis of the business transformation platform and goodwill carried in the books as at on intangible assets 31 December 2020. Goodwill impairment assessment was carried out based on carried out by discounted cash flow methodology to estimate the value in use. management. The Committee reviewed and challenged management’s assessment and concluded that there is no indication of any impairment in the carrying value of these assets; and goodwill is not required to be impaired. To review and Mercury operates the ‘Mercury’ payment scheme in UAE which is a domestic challenge the financial payment card network. performance of Mercury In 2018 the Group’s Board made a strategic decision to divest the scheme operation to be shown as part of of the Group and accordingly classified Mercury as ‘held for sale’ in the 2018 and 2019 continuing operations consolidated financial statements under applicable IFRS, as adopted by the EU. in the consolidated Management remains committed to the disposal of the Mercury business and is financial statements for exploring various opportunities. However the disposal process has been delayed 2020 and the adequacy due to the niche nature of the asset and disruption as a result of the COVID-19 of disclosures made in pandemic. During the year, management conducted an assessment to confirm notes 6 and 16 of the whether Mercury still qualifies for the extension for the classification as ‘held for financial statements. sale’ for the consolidated financial statements for 2020. Management recommended that as the criteria for recognising Mercury as held for sale are no longer satisfied, the financial performance of Mercury for 2020 will be included as part of continuing operations. Appropriate disclosures have been made in the financial statements in note 16. The Committee reviewed management’s assessment and agreed with the change to include Mercury financial performance as part of continuing operations in the consolidated financial statements for the year ending 31 December 2020. The Committee also reviewed the disclosures made in this regards in notes 6 and 16 of the financial statements and was satisfied that the disclosures are appropriate.

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Key issue/ area of focus Brief description Committee review and conclusion Accounting policies Going concern Due to the COVID-19 pandemic, management has carried out a detailed exercise and practices and assessment. during the interim financial reporting (30 June 2020) as well as for the year ended estimates continued 31 December 2020. This included a detailed review of the forecast from 2020 to 2022 to cover a period of at least 18 months from the end of the respective accounting periods. The detailed assessment was done under base case assumptions, and further stress tested under severe but plausible downside scenarios. These forecasts also included a projection of the leverage ratio for each of the periods to check any potential breaches of financial covenants under the financing agreements. The Committee reviewed the going concern assessment carried out by management and challenged management on assumptions, stress scenarios considered and various mitigants incorporated in downside scenarios. After discussion and deliberations, the Committee approved that the consolidated financial statements for the year ending 31 December 2020 should be prepared on a going concern basis. Review of viability As per provision 31 of the 2018 UK Corporate Governance Code, assessment including the Directors are required to satisfy themselves that they have a reasonable the scenarios and expectation that the Group will be able to continue in operation and meet sensitivities considered its liabilities as they fall due over the longer period (longer than 12 months), by management. i.e. the business is viable. The Committee reviewed the viability assessment carried out by management. Due to the impact of the COVID-19 pandemic the Committee challenged management on the assumptions, stress scenarios considered and various mitigants incorporated in downside scenarios. The Committee asked management to consider additional sensitivities which are very severe and in many cases closer to reverse stress tests designed to break the business. After discussions and deliberations the Committee concluded that: i. Various possible mitigants which have been considered by management, wherever required in various sensitivities as modelled, to offset the impact of adverse assumptions, are achievable in the time period modelled and the cost to achieve is reasonable. ii. The mitigants do not fundamentally impact on the operational integrity of the business or its ability to grow again in the future. iii. The Group is viable and will be able to continue in operation and meet its liabilities as they fall due over the three-year period ending 31 December 2023. Please refer to further details in the viability statement section on page 155 of the ARA. FRC publications The Chief Financial Officer provided an update on management’s review of the related to thematic recent documents published by the FRC related to key topics on reporting and reviews of reporting disclosures in the ARA of listed companies, the impact on the Group financial and disclosures in the statements and proposed actions. Annual Report and The Committee reviewed the update and concluded that appropriate actions have Accounts (‘ARA’). been taken by management to make the required changes by incorporating the Committee’s feedback and mapping the reporting and disclosures in the ARA to FRC recommendations.

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Group Internal Audit operations skill set of the team with Group Risk and Group Compliance The Committee oversees the activity additional recruitment, thereby During the year, the Committee of the GIA. GIA is responsible, eliminating reliance on external continued to monitor the amongst other things, for evaluating resource. GIA works closely with the implementation of the key actions the effectiveness of the Group’s risk other assurance providers across the identified during the Financial management, control and governance three lines of defence (e.g. Group Risk) Position and Prospects Procedures processes. As mentioned on page 116, to enhance coverage and minimise risk assessment prepared by PwC the Audit and Risk Committee and duplication. The Coordinated during the IPO process and all issues management supported the newly Assurance Plan for 2021 (approved by have been remediated. A key appointed Chief Internal Auditor to the Committee and referred to above) component of that work was the re-resource and enhance the skills is designed to optimise assurance further development last year of the of the GIA function. As expected, coverage for each of the principal risks enterprise level principal risks, risk this strengthened the quality and by coordinating external (third party) appetite statements and Board level coverage of the third line of defence risk assurance, Group risk assurance KRIs which are underpinned by assurance work provided to the (second line of defence) and GIA existing policies, procedures and Group. A risk-based internal audit plan coverage (third line of defence). controls applicable to front line is prepared by GIA on an annual basis. business activity. These have The internal audit plan, which is The Chief Internal Auditor reports supported the work of Group Risk reviewed and approved by the Audit to the Audit and Risk Committee and the Committee during the year. and Risk Committee, considers key Chairman, and it is the role of the This work is summarised on page 65. risks and emerging strategic risks Audit and Risk Committee (as stated maintained in the risk registers. In in its terms of reference) to assess The Committee has also focused addition, as part of the annual planning the effectiveness of the Chief Internal on the Compliance programme, cycle, GIA consults with senior Auditor and the GIA function. A monitoring progress against the management across the business, formal internal self-assessment of GIA 2020 compliance plan and assurance considers the results of previous against the Chartered Institute of plan. The Committee received audits (internal and external) and Internal Auditors (‘IIA’) standards and reports on the outcomes of monitors the implementation status general industry best practice was assurance reviews conducted which of audit recommendations. This conducted during the first half of were focused on testing the activity ensures that GIA focuses 2020. The Committee reviewed a effectiveness of AML/KYC and on the most significant risk areas comprehensive report of the findings sanctions compliance and monitoring and related key controls. of the assessment and concluded key regulatory changes impacting that significant progress had been the Group’s markets of operation. In approving this plan, the Committee achieved against the GIA The Group also enhanced its existing concluded that the Internal Audit Transformation Plan in the six months whistleblower reporting process by function was sufficiently resourced since the appointment of the new appointing an external confidential and skilled to deliver the plan and Chief Internal Auditor; and GIA was, in whistleblowing service to enable the overall scope of the plan was the main, conforming to IIA standards employees to raise their concerns appropriate given the key and and aligning to best practice. through an independent route. emerging risks. Further progress against the GIA A comprehensive whistleblower Transformation Plan and issues awareness campaign was also Regular updates were received identified through the self-assessment launched to ensure all employees throughout the year from the Chief was achieved during the second half were informed of the process to Internal Auditor. These included inputs of the year to achieve a high level of raise concerns directly with Group on the overall control framework conformance with IIA standards and a HR and Group Risk Officer. which showed an improving risk trend move towards full alignment, in 2021, and high levels of management risk to industry best practice. GIA will The Committee regularly receives awareness meant the overdue high conduct a further self-assessment reports on whistleblowing policy and medium risk audit actions during 2021, the results of which will and processes and monitors all remained low. be presented to and reviewed by the reported and substantiated cases. Committee. The Chief Internal Auditor The Committee also received GIA additionally reviewed key attends all meetings of the Audit and assurance from GIA in 2020 that strategic programmes and its Risk Committee and meets separately the whistleblower programme work is covered on page 127. with that Committee in the absence is adequately designed and of management at least twice a year. operating effectively. With the endorsement of the The Chief Internal Auditor also has a Committee, the Chief Internal Auditor secondary reporting line to the Chief developed a GIA Transformation Executive Officer and has a standing Plan, part of which involved enhancing invite to, and attends, the Group’s the already strong core business Leadership Team meetings.

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Audit and Risk Committee Report continued

The Chief Risk Officer is also the with the FRC independently to discuss Risk management and internal Group Company Secretary and the report and was encouraged by the control systems reports to the Chief Executive Officer feedback received. All actions that are The Group operates the ‘three as well as having a clear reporting relevant have been implemented lines of defence’ model which line into both the Chairman of the already with regard to the 2020 audit. clearly identifies accountabilities Board and the Chairman of the and responsibilities as follows: Committee. The Chief Risk Officer Non-audit services › Business line management has and Group Company Secretary A policy is in place which requires primary responsibility for the attends all meetings of the Audit all non-audit work proposed to be management of risk; and Risk Committee and meets carried out by the external auditor › Risk and Compliance functions separately with that Committee to be pre-authorised by the assist management in developing in the absence of management Chief Financial Officer and/or the their approach to fulfil their at least twice a year. Committee (depending on the responsibilities; and amount involved) to ensure that the Additional risk monitoring provision of non-audit services does › The Internal Audit function checks The Committee considered a not impair the external auditor’s that the risk management process number of new and emerging risks independence or objectivity. This and risk management framework in the period. This included the policy is compliant with the revised are effective and efficient. impacts of COVID-19 on business FRC Ethical Standard 2019 and the performance, business risks and auditor can only be engaged to For more details, please refer to the people, and other sector and provide specific non-audit services Risk section on pages 75 and 76. geographic risks. Additionally, the as described within this new Committee reviewed the robustness standard. The adoption of the Board statements and of systems and processes in place Revised FRC Ethical Standard 2019 confirmations following review that ensured the Group was not did not have a significant impact and recommendation from the exposed to similar risks. on the Group, as the Group already Audit and Risk Committee applied KPMG’s FTSE 350 non-audit As a result, certain additional services policy which incorporated Internal control and risk activities were undertaken with similar restrictions in addition to management in relation to the respect to the Group’s business those provided by the previous FRC financial reporting process model and practices to satisfy the Ethical Standard 2016. The Group has a thorough assurance Committee with regard to new and process in place in respect of emerging risks and the Group’s The total fees payable to Group’s the preparation, verification and responses and mitigations, and these auditor in respect of 2020 amounted approval of financial reports. are summarised on pages 119 to 120. to USD 990,000, out of which the This process includes: fee for non-audit services, which was › the involvement of highly External auditor wholly in respect of the half year experienced and professional During the year the Committee review, is USD 159,000. KPMG did employees, supported by undertook a review of the external not provide any other services to the professional advisors where auditor’s effectiveness which Group in 2020. Comparative figures for appropriate; concluded very strong support for the prior year are included in note 21 to › formal sign-offs from the GCEO, the quality and responsiveness of the financial statements on page 202. the outgoing GCEO, Group CFO the audit work received. A request and Chief Risk Officer; for minor improvements in the Independence audit lead in one geography were Both the Board and the external › comprehensive review by key implemented quickly. auditors, KPMG, have safeguards internal Group functions; in place to protect the objectivity of › a transparent process to ensure KPMG’s 2019 audit was also subject the external auditors. KPMG have full disclosure of information to to an FRC Audit Quality Review confirmed their independence as the external auditor; (‘AQR’). In January 2021, following its auditor of the Company in a letter review of KPMG’s audit of the 2019 addressed to the Directors. Annual Report, the FRC’s Audit Quality Review (‘AQR’) team wrote Risk appetite and approach to the Audit and Risk Committee to risk management Chairman. The Committee The Board’s risk appetite, the Group’s considered the overall outcome of approach to risk management within the review to be positive, with a small its risk framework and new, emerging number of findings identified. The and principal risks were robustly findings were presented to the Audit reviewed in 2020 and are more and Risk Committee at its February fully described in the Principal Risks 2021 meeting. The Chairman of the and Uncertainties section on pages Audit and Risk Committee also met 72 to 87.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 127

› engagement of a professional Group Internal Audit, Risk and Finance After careful review and consideration and experienced firm of have independently assessed the of all relevant information, including external auditors; overall risk and control framework the KPMG review and principal risks, to be materially effective for the the Directors were satisfied that, taken › review and challenge by executive existing business, which has matured as a whole, the 2020 Annual Report management; and significantly during 2020 with and Accounts is fair, balanced and › oversight by the Audit and Risk continued planned improvements understandable and have affirmed Committee, involving (among during 2021. The work conducted that view to the Board. other duties): by management is complemented, supported and challenged by the Going concern – A detailed review of key controls assurance work carried out The Board’s statement in respect financial reporting judgements by the Group Internal Audit function. of adopting the going concern which have been discussed by Regular reports on control issues are basis of accounting is given on management, including the level presented to the Audit and Risk page 158 and in note 2 (d) to the and clarity of the disclosures Committee by the Chief Internal financial statements on page 175. around alternative performance Auditor. The Board, in reviewing the The Committee reviewed and measures (‘APMs’), Specially effectiveness of the system of risk challenged the going concern Disclosed Items (‘SDIs’) and management and internal control, can assessment undertaken by segment reporting; confirm that necessary actions have management, including assessments – Review and, where appropriate, been or are being taken to remedy of the Group’s liquidity and funding challenge on matters including: any significant failings or weaknesses position, and confirmed to the Board identified from that review. that it is appropriate for the Group’s › The consistency of, and any changes financial statements to be prepared to, significant accounting policies Fair, balanced and understandable on a going concern basis. and practices during the year; The Directors confirm that they › Significant adjustments resulting consider the Annual Report Viability from the external audit; and Accounts, taken as a whole: The Board’s statement in respect › is fair, balanced and of the Group’s longer-term viability › Unadjusted differences; understandable; and is given on page 155. › The going concern assumption; › provides the information The Committee reviewed and › The viability statement; necessary for shareholders to challenged the viability assessment assess the Company’s position › The Company’s statement on risk (including the three-year time horizon and performance, business management and internal control selected) undertaken by management model and strategy. systems; and in the 2020 Annual Report and Accounts. The Committee › GIA review of the Annual Report In making this confirmation, the considered the process to support and Accounts verification process Directors took into account their the viability statement in conjunction and control. knowledge of the business, which with an assessment of principal risks, is kept up to date with regular Review of the effectiveness of strategy and business model reports, updates and business the risk management and internal disclosures, taking into account reviews circulated prior to and control systems the assessment carried out by discussed at each Board meeting, Detailed information in respect management of stress testing results and supplemented by a variety of of the risk management systems and risk appetite. The Committee written reports, verbal updates and is included in the Risk report on recommended the Viability presentations given at Board and page 75. Statement (as set out on pages 155 Committee meetings as well as a to 157) to the Board for approval. regular flow of information about During the year, the Board, the business between meetings. through the work of the Committee, The Directors then took into account has conducted a review of the the thorough preparation and effectiveness of the Group’s system verification process conducted by of risk management and internal management in respect of the control in line with the FRC Guidance Annual Report and Accounts, as on Risk Management, Internal Control described above, and: and Related Financial and Business Reporting. There is an ongoing i. a formal audit by KPMG, process for the identification and external auditors; evaluation of risk management and ii. a formal review by the Audit internal control processes. and Risk Committee; and iii. a final review by the Board of Directors.

Network International Holdings Plc Annual Report and Accounts 2020 128

Nomination Committee Report

Ron Kalifa OBE Other members Meetings also regularly attended by: Committee Victoria Hull › Jay Razzaq, Chief Risk Officer and Darren Pope Group Company Secretary Chairman Habib Al Mulla Read Directors’ biographies Number of meetings on pages 94 to 96 held in the period 3

Attendance Ron Kalifa (Chair) 3/3 Victoria Hull 3/3 Darren Pope 3/3 Habib Al Mulla 3/3

Dear Shareholder Although Simon stepped down In 2020, we created a stronger, from the Board on 31 January 2021, We have created a balanced, and diverse Board, with he remains with the Company stronger, balanced, and the appointment of four additional throughout his six-month notice Independent Non-Executive period to ensure a smooth transition. diverse Board to support Directors and our long serving CFO our strategic objectives as an Executive Director. We were I am satisfied with the thorough and take the Company delighted at the start of this year Board appointments process through its next phase to announce the appointment of described below and very pleased Nandan Mer as Group CEO from that we have been able to attract of growth.” 1 February 2021. Nandan’s both Executive and Non-Executive appointment follows Simon Haslam’s Directors of the highest calibre in Ron Kalifa OBE decision to retire from the Company line with our exacting requirements. Committee Chairman after 40 years in the financial services It is also satisfying that these industry. Our new colleagues have a appointments bring diversity to the breadth of skills, experience and Board across a range of measures, knowledge to support our strategic including gender and ethnicity, objectives and take the Company in line with investor expectations. through its next phase of growth. Anil Dua and Ali Mazanderani In the latter part of the year, were appointed to the Board on the Committee reviewed the 22 January 2020 and Diane Radley implementation of the Company’s and Monique Shivanandan joined policy on equality, diversity and us on 1 January 2021. We are also inclusion that lies within the Group’s pleased that Rohit Malhotra, our Employee Charter launched in 2019. highly experienced Group Chief We were pleased with the clear Financial Officer since 2015, joined linkage with the Company’s strategy the Board on 2 June 2020. Each and values and the significant of our newly appointed Directors progress made against the objectives undertake a thorough induction despite the extraordinary challenges programme, which is described our people faced during the year. within the Governance Report on page 108.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 129

The safety and well-being of our Composition of the Committee Principal activities of the employees is always a priority. Ron Kalifa (Board Chairman and Committee during the period Since the outbreak of the COVID-19 Chairman of the Committee) and In the period from 1 January 2020 situation in the early part of 2020, Independent Non-Executive to the date of this report, the most of our people have worked Directors Victoria Hull, Darren Pope Committee carried out the following: from home and management’s and Habib Al Mulla were members of priority has been to support the Committee throughout the year. › Conducted a review of the skills, employees through these challenging experience and knowledge of the times. Whilst management’s Role of the Committee Non-Executive Directors and initiatives have been successful and The Board has delegated to the mapped them against the strategy well received by employees, as Committee authority to: of the Group; evidenced by the eight percentage › Review the size and structure of › Conducted a thorough process point improvement in overall the Board, to consider succession (described below) to identify and employee engagement, remote planning for Directors and the appoint additional Independent working has set back the Board’s Executive Management Team Non-Executive Directors; engagement with the talent pipeline and to lead the process for the as such engagement has been appointment of new Directors; › Conducted a thorough CEO restricted to those who present to, selection process; › Ensure there is clarity in respect of or attend, Board and Committee the role description and capabilities › recommended the appointment of meetings. This will be a priority in the required for such appointments; our long-serving CFO to the Board; current year when the Committee will also focus on Executive › Conduct a review of the skills, › Considered the independence, Management succession planning experience, knowledge and effectiveness and time and diversity within the Network diversity of the Directors and lead commitment of the Directors Leadership Team. on the annual evaluation of the before reviewing the proposed effectiveness of the Board, its election or re-election of the Committees and individual Directors at the 2020 and Directors (the evaluation of the 2021 AGMs; Ron Kalifa OBE Chairman to be led by the Senior › Upon the strengthening of the Chairman and Chair of Independent Director); Board by the appointment of the Nomination Committee › In the light of the above, consider additional Independent Non- 7 March 2021 the re-election of each Director Executive Directors, conducted a in advance of each AGM; review of, and made changes to, the memberships of the Board’s › Review the membership and Committees; and Chairmanships of each of the Board’s Committees; › Reviewed the implementation of the Company’s policy on equality, › Approve and actively monitor the diversity and inclusion that lies Company-wide policy on diversity within the Group’s Employee and inclusion, including gender, Charter launched in 2019, noting ethnicity, social background, the clear linkage with the cognitive and personal strengths, Company’s strategy and values sector experience and professional and the significant progress made background, and review against against the objectives (as reported the strategic priorities and the main within the Responsible Business trends and factors affecting the section of the Strategic Report long-term success of the Company; on pages 60 to 61. › Review and monitor the pipeline of talent below Board level; › Review as and when required the Directors’ potential conflicts of interest; and › Make recommendations to the Board on all the above matters as appropriate.

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Nomination Committee Report continued

The leadership and oversight of the The Committee conducted a of essential, preferred or acceptable first annual Board evaluation, which thorough process to identify and so as to allow the calibration of each was conducted in second half of the appoint additional Independent candidate against the preferred year, was conducted by the Board Non-Executive Directors. As part requirements. Egon Zehnder and the process, outcomes and of that process the Committee: conducted a comprehensive search action plans are disclosed on page and produced a diverse shortlist of 104 of the Governance Report. › Reviewed the Code requirements, 12 candidates. The final selection investor expectations and the process involved interviews with the In 2021, the Committee will also: Board’s objectives in relation Chairman and separately the other to Board composition, including members of the Committee. › Review succession planning and independence and diversity; the pipeline of talent for the As a result of this process Anil Dua Executive Management Team, › Reviewed the skills, experience and Ali Mazanderani were appointed taking account of the challenges and knowledge of the continuing to the Board on 22 January 2020 and opportunities facing the individual Directors and the Board and Shayne Nelson, Aaron Goldman Company, the gender balance of collectively and conducted a gap and Daniel Zilberman continued to the senior population* and future analysis by mapping the results serve on the Board until the AGM leadership requirements; against the strategic priorities and held on 30 April 2020. The Board main trends affecting the long- › Review a programme of ongoing also agreed that Suryanarayan term success of the Company; engagement meetings between Subramanian (who was no longer the Chairman, Independent NEDs › Reviewed and agreed the employed by, nor represented, and high potential talent across experiential requirements of ENBD) would remain as a Board the Group; and additional Directors and considered member, in order to provide support and agreed the attributes that and continuity, given his long- › Review the Committee’s activities would be desirable to ensure best standing experience with the measured against its terms of fit with the culture of the Board and business and market. reference. the organisation; and The Committee agreed that the Board appointments process › Considered the timing of Board process followed was thorough and As described within the section on composition changes to balance rigorous, and that the calibre of Board and Committee membership Code compliance, investor candidates identified by Egon and diversity on page 106, ENBD expectations and the reduction Zehnder and placed on the shortlist and WP/GA each reduced their in holdings of major shareholders was very high. Anil Dua and Ali share interest below the level that with ongoing support and Mazanderani were selected and entitled them to nominate for continuity provided by the recommended for appointment to appointment Non-Executive experienced outgoing Directors. the Board because they met in full Directors to the Board. Upon the Having conducted the above review, the Committee’s requirements reduction in shareholdings the the Committee considered the with their significant expertise in Company had the right under the approach to be taken to identify the Company’s sector and markets, respective Relationship Agreements a range of high calibre candidates which will support the Group’s to procure the resignation of such for the role of Independent Non- strategy. In particular, Ali has an appointed Directors from the Board. Executive Director and agreed to extensive background in the global However, the Company decided not appoint the international search payments industry and Anil’s financial to exercise such right immediately and selection firm Egon Zehnder services experience has been focused on the grounds that until the to support it in its search. The on the African continent. appointment of additional Committee provided Egon Zehnder independent Directors, the skills, with a comprehensive brief based on In the second half of 2020, the knowledge and experience of the above review process and that Committee followed the same Shayne Nelson, Aaron Goldman included a detailed assessment of thorough and rigorous Board Daniel Zilberman and Suryanarayan the skills and experience required, appointments process as described Subramanian and the contribution under the headings: Board/Non- above, with the objective of that each makes to the deliberations Executive Director experience, enhancing the Board’s skill set of the Board and the Company’s sector, business environment and through the appointment of long-term sustainable success personal traits. These skills and individuals with extensive experience would continue to be of benefit experience requirements were also in technology, Africa and also in to the Company. ranked by the Committee as one the product area to support the

* The Company’s approach to diversity and inclusion, and statistics in respect of our gender diversity, are disclosed in the People section on pages 60 and 61.

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Company’s strategic objectives Egon Zehnder also facilitated the and take it through its next phase Board and Committee evaluation of growth. The objective also sought in 2020, which gave them a unique to address the lack of gender insight into the culture and workings diversity in the Board’s then of the Board that would assist composition. Upon being briefed them in their search for appropriate by the Committee, Egon Zehnder candidates for appointment. Egon conducted a comprehensive search Zehnder do not have any other and identified a number of high connection with the Company calibre candidates for further or individual Directors. consideration and interview. Diane Radley and Monique Shivanandan, Board Appointments Policy who were appointed to the Board Appointments to the Board are with effect from 1 January 2021, were made on merit against objective selected for appointment because criteria, including consideration of they met in full the Committee’s the strategic priorities and main requirements. Their appointments trends affecting the long-term further strengthen the Board’s success of the Company, and with independence and deepen its due regard for the benefits of requisite experience with Diane diversity on the Board. This process having extensive finance, audit is led by the Committee, which and risk experience having served evaluates the skills, experience on boards in executive and non- and knowledge of the Directors executive director capacities at and identifies the requirements of major South African businesses; additional Directors before making and Monique being a recognised recommendations to the Board. technology leader with over 30 The Board Appointments Policy years of experience working for recognises the benefits of diversity large global companies within the including gender diversity and telecommunications, banking and reinforces the Board’s principle insurance sectors. Monique also that appointments are made on has non-executive director board merit, in line with current and future experience. requirements and reflect the UK listing, its UAE base and international Also, in the second half of the year, activity of the Group. Appointments Simon Haslam indicated he would to date have been in line with like to retire after a long and that policy. successful career of over 40 years. To assist with the search for a The Board endorses the aims of the successor, the Committee fully Hampton-Alexander Review entitled briefed and engaged Egon Zehnder ‘FTSE Women Leaders – Improving to identify suitable candidates with gender balance in FTSE Leadership’ a strong track record of growing and aims to improve the gender businesses, with a breadth of diversity of the Board over time. experience in financial services, A copy of the Company’s Board preferably payments, and experience Appointments Policy can be found of international markets, especially on the Group’s investor website at the Middle East and Africa. A number https://investors.networkinternational. of prospects were introduced by the ae/investors/corporate-governance/ Chairman and other members of the Board, leading to the decision by the Committee to recommend the appointment of Nandan Mer with effect from 1 February 2021.

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Directors’ Remuneration Report

Victoria Hull Other members Report structure Committee Chair Habib Al Mulla, Ron Kalifa, Darren This report consists of two sections: Pope, Ali Mazanderani Section 1: Remuneration Overview Number of meetings pages 136 to 139 held in the period Chair Statement, summary 8 of Directors’ Remuneration Policy including intended Attendance1 implementation in 2021 and Victoria Hull (Chair) 8/8 remuneration in context. Habib Al Mulla2 5/5 Ron Kalifa 8/8 Section 2: Annual Report on Remuneration pages 140 to 148 Darren Pope2 5/5 Remuneration received by the 3 Ali Mazanderani 7/8 Executive and Non-Executive Directors in the financial year ending 31 December 2020.

1 The FY20 meetings listed for each Remuneration Committee member reflect the number of meetings they were eligible to attend as members of the Remuneration Committee during the year. As and when required, Suryanarayan Subramanian has been asked to attend by invitation to provide advice and expertise. 2 Darren Pope and Habib Al Mulla left the Remuneration Committee on 2 June 2020 and attended all meetings to which they were invited. 3 Ali Mazanderani was unable to attend one of the meetings held during the period since joining the Remuneration Committee on 22 January 2020.

Dear Shareholder Whilst the COVID-19 pandemic has I am pleased to present to you had a significant short-term financial Without doubt, 2020 has the Directors’ Remuneration impact on our business, we exited been a very challenging Report (‘DRR’) for the year ended the year with positive momentum 31 December 2020. This DRR across all of our business lines. Our year for the Company is presented in two sections: revenues declined by 15.1% during and our shareholders. 1) Remuneration Overview; and the year and underlying net income1 As a Committee, we 2) Annual Report on Remuneration. declined by 60.7%. Whilst Q4 2020 have sought to take into total revenue was down 19% on the Firstly, I would like to thank all previous year, absolute revenues in account the performance our shareholders for your support Q4 were higher than Q3, reflecting of the business and to during this period of uncertainty the continuing recovery in card reflect this in our as the global pandemic impacted and digital transactions across remuneration outcomes.” so many of our markets and our markets, and particularly presented unforeseen challenges encouraging trading in December. Victoria Hull for our business. Despite the current circumstances Chair of the Remuneration and after carefully balancing our Committee Without doubt, 2020 has been a very operational expenses and capital challenging year for the Company and spending, we closed the year with a our shareholders. As a Committee, strong balance sheet, with leverage we have sought to take into account of 2.3x net debt: underlying EBITDA1, the performance of the business and and significant headroom to our to reflect this in our remuneration covenants of 3.5x. outcomes. The Executive Management Team has moved quickly to respond Response to the pandemic appropriately, taking into account Earlier this year, acknowledging the the impact and views of all our impact the pandemic has had on key stakeholders. the economy and our shareholders,

1 This is an alternative performance measure (‘APM’). See note 4 of the consolidated financial statements the Group CEO, Simon Haslam, for APM definitions and the reconciliations of reported figures to APMs.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 133

voluntarily waived his salary increase to a relocation payment of one month’s FY20 Directors’ pay arrangements due from 1 April 2020, his 2020 salary to support his departure from Fixed pay and Board fees annual bonus and 2020 LTIP award. the UAE. No ex gratia payments will As noted above, the CEO voluntarily be provided. waived his salary increase for FY20. From 1 May 2020, the Chairman and His salary was therefore unchanged the Non-Executive Directors agreed Nandan Mer’s remuneration will be in at $547,000. The CFO’s salary on to a voluntary 25% reduction of their line with the current Remuneration his appointment to the Board was fees for the remainder of the year. Policy, and his salary will be similarly set at $457,000. As mentioned The CFO was appointed as an aligned to Simon Haslam’s, at previously, the Chairman and the Executive Director on 2 June 2020 $550,000 per annum. He will not Non-Executive Directors agreed and upon his appointment he also receive any additional sign-on or to a voluntary 25% reduction of their waived his 2020 annual bonus. buyout awards, but will be granted an fees for the remainder of the year There will be no further increase LTIP award equal to 300% salary in from 1 May 2020. in fees for the Chairman and CEO his first year of employment to help in 2021. ensure that he is rewarded for driving Annual Deferred Bonus Plan (‘ADBP’) value from the current share price The maximum opportunity under CEO retirement and recruitment over a three-year period, and increase the ADBP is 200% of fixed salary After 40 years in the financial sector, shareholder alignment. with anything payable in excess of Simon Haslam decided to retire as 100% of salary deferred into shares Group CEO. Following a rigorous CFO appointed to the Board for three years. The performance search and selection process On 2 June 2020, Rohit Malhotra was assessment under the ADBP for supported by external advisors, we appointed to the Board in his existing 2020 was to be based on a balanced are pleased to announce that Nandan role as Group CFO. Rohit has been an scorecard of financial metrics (75%) Mer, formerly Mastercard Strategy integral member of the Company for and non-financial metrics (25%). As Head – International Markets, more than 10 years and has held the previously disclosed to shareholders, succeeded Simon as Group CEO Group CFO role since June 2015. He both the CEO and CFO advised the effective 1 February 2021. is an excellent addition to our Board Remuneration Committee that they and will provide valuable insights would waive any bonus payable for Simon stepped down as Group CEO on steering through the challenges 2020 performance, in the light of and from the Board of Directors on posed by the ongoing pandemic the impact of COVID-19. 31 January 2021 but will remain with while seizing fresh opportunities as the Company throughout his six-month businesses adapt. 2020 LTIP notice period to ensure a smooth As noted above, the CEO had transition. Simon will continue to receive NED appointments decided to waive his LTIP award in his fixed salary and benefits during his Ali Haeri Mazanderani and Anil Dua respect of 2020. Notwithstanding notice period. He will receive retirement were appointed to the Board as this decision, the Committee felt provisions in the form of an end of Independent Non-Executive Directors, that continuing to award LTIP service gratuity as per UAE practice. effective 22 January 2020. Ali Haeri awards in respect of the CFO and Simon’s in-flight LTIP awards will be Mazanderani joined the Audit other members of the Company’s pro-rated and vest on their original and Risk Committee and the leadership team was important to vesting date, and continue to be subject Remuneration Committee, and ensure the alignment and continued to the achievement of performance Anil Dua joined the Audit and motivation of our management team conditions, as well as malus and Risk Committee. during this period. As a result, the clawback provisions. As a good leaver, 2020 LTIP awards were granted in shares Simon acquired as part of the Diane Radley and Monique the form of conditional awards to the conversion of pre-IPO incentives from Shivanandan were appointed to CFO and other members of the cash to shares will continue to vest on the Board as Independent Non- leadership team on 19 August 2020 the normal date. Simon will be eligible Executive Directors, effective and consisted of three elements: i) an to receive a pro-rated annual bonus for 1 January 2021. Diane Radley joins award of up to 200% of fixed salary the time worked during 2021, subject the Audit and Risk Committee and (calculated by reference to the IPO to achievement of the relevant the Remuneration Committee, offer price of £4.35 as this was higher performance conditions. Any bonus and Monique Shivanandan joins than the average share price awarded will be payable on the normal the Audit and Risk Committee. calculated over a period of up to 30 date in 2022, and will be subject to days prior to the grant) conditional malus and clawback provisions. Any As mentioned in last year’s Annual on the achievement of stretching payments made will be disclosed in full Report, Shayne Nelson, Daniel EPS (50%), revenue (25%) and in the Annual Report relating to the Zilberman and Aaron Goldman relative TSR (25%) performance financial year. Simon will not be eligible stepped down from the Board at the metrics, consistent with the 2019 LTIP to receive an award under the LTIP AGM on 30 April 2020 as planned. award; ii) a kicker which can enhance during 2021. Simon will also be entitled the award value by 50% based on the achievement of absolute TSR at

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Illustration and application of the current Directors’ Remuneration Policy for 2020 The charts below illustrate the potential split between the different elements of the Directors’ remuneration under four different performance scenarios: Minimum, Target, Maximum including kicker and Maximum with 50% share price growth.

Simon Haslam Rohit Malhotra1 CEO CFO 3,462 4,500 4,140 3,500 422% 4,000 421% 3,000 2,775 3,320 3,500 281% 2,500 3,000 281% 2,500 2,000 1,788 1,494 2,000 1,500 112% 1,500 112% 187% 187% 187% 187% 1,000

Remuneration (USD’000) Remuneration 1,000 94% 94% 585 5% 5% 5% 5% 585 5% 488 4% 4% 4% 4% 488 4% 1% 1% 1% 1% 1% 500 2% 2% 2% 2% 2% 500 94% 94% 94% 94% 94% 94% 94% 94% 94% 94% 0 0 Minimum Target Max Max Actual Minimum Target Max Max Actual (includes impact + 50% SP (includes impact + 50% SP of kicker) growth impact of kicker) growth impact

Fixed salary (USD) Beneﬁts Gratuity Annual Bonus LTIP

1 To aid comparability we have used Rohit Malhotra’s full year annualised remuneration elements for his actual remuneration. the end of the performance period FY21 Directors’ pay arrangements 2021 LTIP along with full achievement of the Fixed pay The approved 2021 LTIP award to be other performance conditions; and The newly appointed CEO, having granted to the Executive Directors iii) a ROCE underpin over the three- been appointed in 2021, will not will consist of an award of 300% of year performance period which receive a salary increase in 2021. salary for the CEO, and 200% of could reduce levels of vesting by The CFO’s base salary will be kept salary for the CFO, conditional on the 10% if not met. under review during 2021, taking achievement of adjusted EPS (50%), into account corporate and individual revenue (25%) and relative TSR (25%) Pre-IPO cash awards performance. As such, Simon performance metrics, consistent with As previously disclosed, the Haslam’s salary will continue to be the 2020 LTIP award. No kicker Company accelerated the vesting of $547,000 p.a. The newly appointed element will apply for the 2021 LTIP a portion of the final tranche of the CEO, Nandan Mer’s, salary has been award. The Remuneration Committee pre-IPO cash awards for both the set at $550,000 p.a. The CFO, Rohit will also apply an underpin to the CEO and CFO on the condition that Malhotra’s, salary remains at award vesting such that it is satisfied they used the proceeds to acquire $457,000 p.a. that the Company’s Return on shares in the Company. As a result, Capital Employed (‘ROCE’) is at an the CEO and CFO acquired 200,295 Annual Deferred Bonus Plan (‘ADBP’) appropriate level to ensure the and 167,536 shares respectively at The maximum opportunity under the effective deployment of capital and £4.10 per share, being the share price ADBP will remain at 200% of fixed the quality of its earnings growth. at which equity was raised through salary with any payment in excess of an accelerated book building 100% of salary being deferred into At the time of preparing the process. These shares are subject to shares with a three-year holding Company’s Annual Report and a holding period such that they will period. The performance assessment Accounts, the performance targets be released on the same terms and under the ADBP will continue to be for the 2021 LTIP award are not conditions and timings as the relevant based on a balanced scorecard of finalised; they will be announced portion of the pre-IPO cash awards. financial metrics (75%) and non- prior to the AGM on 20 May 2021 by financial metrics (25%). release of a regulatory news service (‘RNS’) announcement.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 135

Continuous improvement / Shareholder engagement wider workforce The Remuneration Committee Despite the challenges of the values investor feedback and pandemic, we have continued to carefully considers the AGM voting provide all employees their salaries results each year. in full throughout the year, and have not made any redundancies. We remain committed to ensuring we have an open and constructive This year saw our first recorded Q&A dialogue with shareholders around session with the wider workforce on Executive remuneration Executive pay arrangements as part arrangements. I have engaged with of our 2020 employee engagement a number of shareholders in the initiatives. Employees across the early part of the year mainly around Group i.e. UAE, South Africa, Jordan, the need to delay the setting of LTIP Nigeria and Egypt were contacted targets, in light of the disruption and and encouraged to participate. uncertainty caused by the pandemic. I am pleased to report that all the questions raised were answered, and I look forward to gaining your support the recording has been circulated at the AGM on 20 May 2021. locally via employee weblink. Whilst there were no suggestions from Once again, I would like to thank you employees concerning Executive all for your support and engagement pay, the Remuneration Committee throughout the past year and I and the Group Chief Human remain at your disposal should you Resources Officer intend to support have any questions. employees at every opportunity should they have any suggestions As always, I would like to thank to support understanding of the my fellow Remuneration Committee Directors’ pay arrangements in the members, and those who supported context of the reward framework the Remuneration Committee, for the wider employee population. for their commitment and guidance especially during this Given the exceptional circumstances unprecedented period. of this year we carried out an employee feedback survey on COVID-19 actions alongside the annual Employee Engagement Victoria Hull Survey. We are also pleased to report Chair of the Remuneration Committee an 8% improvement in our 2020 7 March 2021 Employee Engagement Survey and an 89% highly satisfied score on our COVID-19 actions feedback survey.

Additionally in 2020, the Human Resources team put in a number of measures to guide employees during the onset of the pandemic, followed by a smooth migration to working- from-home, the provision of remote healthcare and the introduction of a mental health well-being helpline.

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Section 1: Remuneration Overview

At a glance: Summary of Directors’ Remuneration Policy and implementation in 2021 Our Directors’ Remuneration Policy (DRP) was approved by 96.6% of shareholders at our AGM on 30 April 2020 and is intended to be in place for three years from the date of approval. The DRP is summarised in the table below along with our intended operation in 2021. Our full DRP, including details relating to recruitment, change of control, loss of office, malus and clawback, discretion, Non-Executive Director (NED) fees, and service contracts, is available in our Annual Report relating to the 2019 financial year on our website: (https://investors.networkinternational.ae/ media/1237/netint-annual-report-030420.pdf).

DRP element and Performance measures, assessment link to strategy Operation (Policy) and proposed operation in 2021 Fixed Salary Executive Directors’ fixed salaries are reviewed annually, and any Nandan Mer: $550,000 p.a. To provide competitive fixed changes normally take effect from 1 April, in line with the wider Simon Haslam: $547,000 p.a. remuneration that will attract and workforce. Fixed salaries may also be reviewed where there is a retain key Executive Directors change in position or responsibility. Rohit Malhotra: $457,000 p.a. and reflect their experience and Fixed salaries are comprised of a fixed basic salary and a fixed position in the Company. allowance, as per local market practice. When determining an appropriate fixed salary, the Remuneration Committee considers: › remuneration practices within the Company; › the general performance of the Company; › salaries within the ranges paid by the companies in the comparator group for remuneration benchmarking; › any change in scope, role and responsibilities; and › the economic environment. In general, fixed salary increases will be in line with the approach for the wider workforce, unless there is a material change in role, experience or prevailing market conditions.

Retirement Benefit A retirement benefit may be provided in line with local market practice. The Executive Directors do not To provide a competitive Company This may be by way of a contribution to a pension scheme or cash currently receive a pension or cash contribution, in line with local allowance in lieu of pension benefits. in lieu, but are eligible for an end of practice, that enables effective Capped at 15% of fixed salary. This is in line with the minimum pension service gratuity, in line with local retirement planning. contributions requirement of the UAE Federal law applicable to UAE market practice (see below). nationals and citizens of the Gulf Cooperation Council countries, subject to change from time to time.

End of Service Gratuity End of service contributions are accrued by the Company. The amount The Executive Directors are eligible To provide an end of service of the end of service gratuity accrual is not prepaid annually. The end for end of service gratuity. gratuity payment upon termination, of service gratuity will be paid as a lump sum cash payment following as required under the UAE Labour termination, typically based on length of service and final base salary. Law for non-UAE nationals. In certain circumstances, the payment may be calculated by reference to fixed salary. Limited to two years’ base salary by the UAE Labour Law.

Annual Bonus Performance measures and targets are chosen annually, to support the Maximum opportunity of 200% of To incentivise the achievement Company strategy as required. Performance measures are a range of salary with anything payable in of annual objectives which interdependent financial measures (at least 50%) such as Revenue and excess of 100% of salary deferred support the Company’s short- EBITDA, and non-financial objectives. for three years. term performance goals and Any portion of an Executive Director’s annual bonus amount over 100% Targets are commercially sensitive protect longer-term interests of annual fixed salary is deferred into shares with a three-year holding and will be disclosed retrospectively. of the Company. period (to which no further performance conditions are attached). The remainder of an annual bonus is paid in cash. Maximum bonus of 200% of annual fixed salary.

LTIP Annual grant of share awards (structured as conditional share awards It is proposed that the 2021 LTIP To support the long-term strategic or nil-cost options) subject to stretching performance conditions is granted at 300% of salary for objectives of the Company. measured over three years, and a two-year post-vesting holding period. the CEO and 200% for the CFO Performance measures and targets chosen annually, to support the (without the kicker element). Company strategy as required. The measures and weightings Dividend equivalents may accrue on shares vesting and will typically proposed are in line with 2020: be paid in shares at the time of vesting, to the extent that shares vest. Adjusted EPS (50%) Award of up to 200% of fixed salary. A clawback period of two years Revenue (25%) from vesting applies to LTIP awards. Ability to award a kicker Relative TSR (25%) opportunity of up to 50% of the LTIP award maximum, subject to additional performance condition(s). Ability to award up to 300% of fixed salary in special circumstances such as recruitment of an Executive Director. The kicker element and the exceptional maximum LTIP award of 300% will not be both awarded to the same Executive Director in a single award.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 137

DRP element and Performance measures, assessment link to strategy Operation (Policy) and proposed operation in 2021 Pre-IPO Incentives IPO IPO Cash Bonus and MIP payments awarded at IPO are due to be paid N/A Cash bonus/MIP Awards in cash over the period to October 2021. To enable Executive Directors Ability to accelerate the vesting of a portion of the IPO Cash Bonus/MIP to meet their shareholding awards (of a minimum amount equal to 200% of fixed salary) provided requirements earlier, and to the cash is used to invest in shares of the Company. The shares will be improve the alignment of subject to a holding period and will be released on the same terms as Executive Directors’ interests the portion of the IPO Cash Bonus and MIP awards for which vesting and those of shareholders. will be accelerated. Clawback provisions will continue to apply. Discretion to accelerate the vesting of IPO Cash Bonus/MIP awards of a minimum equal to 200% of fixed salary to enable cash to be used to invest in shares.

Shareholding Guidelines Executive Directors have five years from joining the Company to build The Executive Directors have a To align the interests of up a minimum shareholding requirement of fixed salary. Post-cessation, shareholder guideline of 300% Executive Directors with the Executive Directors will have to retain their full shareholding of fixed salary. interests of shareholders. requirement for 12 months, and retain half of their shareholding requirement for a further 12 months. Shares relating to awards to be granted after the date of the 2020 AGM will be included for the purposes of the post-cessation shareholding requirement. Shares relating to awards granted before this date, as well as any shares purchased by the Executive Directors (and for the avoidance of doubt, the pre-IPO cash payments converted into shares), will not be included. The Remuneration Committee will ensure that there is the necessary contractual agreement between the Company and the Executive Directors and/or enforcement mechanism in place to enforce the post-cessation shareholding requirement.

All-Employee Share Plans There are no all-employee share plans currently in place, but this will N/A To encourage employees to remain under review. become shareholders in the Company and thereby align their interests with those of shareholders.

Employee engagement Share ownership across our employees To encourage employee share ownership across the Company, shortly after the listing, all employees in our various geographies received a one-time award of shares equal to the greater of one month’s salary or 250 shares. The Company believes that extending share ownership throughout the workforce will encourage loyalty and engagement, whilst allowing employees to participate in the Company’s success. It also aligns the employees’ interests with those of shareholders.

Direct engagement with employees Whilst the requirement to report on employee engagement does not apply directly to the Company as it employs fewer than 250 employees in the UK, the Remuneration Committee believes it is important that the Company is progressive and embraces the spirit of this regulation. The Company aspires to place its people at the heart of its business. Key actions that reflect how the Company engages with employees are described in the ‘Responsible Business’ section of the Strategic Report. Improvements to strengthen direct employee engagement with the Board and the Remuneration Committee will be pursued in FY21.

Remuneration engagement The Remuneration Committee takes into account total budgeted salary expenditures and remuneration allocation principles to ensure fairness and alignment of the salary increases across the full employee population, including those relating to the Executive Directors and the Executive Management Team. The Remuneration Committee has oversight of the remuneration arrangements for all employees across the Group, and it is satisfied that the core elements of executive pay align with the wider workforce, but differ based on scope, responsibility, seniority level and location. In summary: › Competitive benefits and pension are provided in line with local market and legislation; › Employees participate in either an annual bonus plan or a sales incentive scheme. The Executive Management Team participates in the incentive plans for Executive Directors: the ADBP and the LTIP; › All employees employed at the time of IPO were awarded a one-time award of shares post-IPO (granted under the LTIP); and › The award and structure of recognition and retention payments, where necessary, to reflect the 2019 LTIP ‘underwriting’.

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Section 1: Remuneration Overview continued

Indicative gender pay gap We are committed to creating an inclusive workplace with equality and fairness at the heart of our practices and policies. The programmes and engagement initiatives supporting our inclusive philosophy are detailed on page 25. As part of this, we strive to give women the same career and pay progression as men. Understanding our gender pay gap is a further step in promoting positive change. In the context of our UAE-based employees, which form the majority of our workforce, the mean gender pay gap (total remuneration) to 31 December 2019 is 17%, whilst the median gender pay gap is 24%. The male population equates to 73% of the overall population whilst the female population is 27%. Rather than a case of unequal pay for equal work, our pay gap is primarily due to the uneven distribution between men and women across the business, which is mainly related to the markets in which we operate. This continues to be an area that management and the Remuneration Committee are keeping under review for 2021 and we are taking various measures to grow our overall female population, particularly for senior roles. These measures include improvements in the competitiveness of reward, as well as examining our policies around career management, recruitment and retention.

Remuneration alignment to financial and strategic performance

Performance Annual Deferred Long Term measures Bonus Plan (‘ADBP’) Incentive Plan (‘LTIP’) Financial Revenue

EBITDA

Adjusted Earnings Per Share (‘EPS’)

Relative TSR

Absolute TSR

ROCE (underpin)

Strategic Master Transitional Services Agreement

Key Regional Market Growth

Stakeholder Management & People

Risk, Governance & Internal Audit

2020 performance overview

Revenue Underlying EBITDA1 Master Transitional Key Regional Stakeholder Risk, Governance USD USD Services Agreement2 Market Growth Management & People & Internal Audit

-15.1% from FY19 -33.2% from FY19

$284.8m $112.6m Separation of Completed transition 8 percentage point Constituted the shared services to next generation improvement in Enterprise Risk from Emirates NBD technology platforms. Employee Management Bank PJSC on plan Customers migrated. Engagement Survey. Committee (‘ERMC’). and cost targets. Multiple customer wins. Completed the annual revision exercise of Progressed our entry Group’s principal and to Saudi Arabia market. emerging risks as part of the risk disclosure required for the Annual Report and Accounts (‘ARA’) for 2020.

1 This is an alternative performance measure (‘APM’). See note 4 of the consolidated financial statements for APM definitions and the reconciliations of reported figures to APMs. 2 Network International LLC and Emirates NBD Bank PJSC have entered into a master transitional services agreement (‘MTSA’). Under the MTSA, Emirates NBD Bank PJSC provides certain IT and operational services to Network International LLC for a transitional period of three years, unless agreed otherwise by the parties in writing.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 139

Section 2: Annual Report on Remuneration

Executive Directors’ remuneration Figure 1: Single total figure table (audited) The table below sets out the single total figure of remuneration for the Executive Directors in FY20. For the CFO, the period is from 2 June 2020 (the date the CFO was appointed to the Board) to 31 December 2020. To aid transparency, we have also disclosed the CFO’s payments on an annualised basis. None of the FY20 nor FY19 remuneration payouts are linked to share price growth, and as such, no estimate of the amount of single figure remuneration linked to share price growth is reported. The former CEO and the CFO waived any bonus entitlement in respect of FY20. Noting this and the fact that no LTIPs were due to vest in FY20, the Remuneration Committee is satisfied that the total remuneration for the Executive Directors is appropriate in the context of business performance, motivation, and retention. No discretion was exercised to determine the total remuneration as a result. To aid transparency, we have also disclosed the CEO and CFO’s payments on an annualised basis.

End of Sub-Total Annual LTIP service Pre-IPO Sub-Total (variable Executive Fixed salary Benefits1 bonus2 vested3 gratuity4 incentives5 (fixed pay) pay) Total 6 Director Year USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 Simon Haslam7 FY20 547 7 0 0 31 0 585 0 585 FY19 From 27/02/2019 (date of appointment) 463 5 532 0 26 8,150 494 8,682 9,176 Rohit Malhotra7 From 02/06/2020 (date of appointment) 269 6 0 0 12 0 288 0 288

Annualised figures End of Sub-Total Annual LTIP service Pre-IPO Sub-Total (variable Executive Fixed salary Benefits bonus vested gratuity incentives (fixed pay) pay) Total Director Year USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 Simon Haslam FY19 547 6 629 0 31 8,150 584 8,779 9,363 Rohit Malhotra FY20 457 10 0 0 21 0 488 0 488

Figures reported have been annualised for comparison purposes where the Director was not a member of the Board for the full year.

1 Relates to private medical insurance. This benefit is non-pensionable. 2 Simon Haslam and Rohit Malhotra waived their ADBP bonus payment for FY20. For Simon in FY19 this represents 57.5% of maximum (or 115% of fixed salary), of which 100% of fixed salary (USD 547k) was paid in cash and the portion above 100% of fixed salary (15% or USD 82k) was deferred into shares with a three-year holding period (with no further performance measures attached). No discretion applied. 3 No LTIP awards vested in FY19 and FY20. 4 Relates to the provision accrued during the year. 5 Relates to the IPO cash bonus and the MIP awards which were earned on IPO. Detailed disclosures provided in the 2019 Annual Report. 6 No other item of remuneration received in FY20 other than as disclosed in the table. 7 Simon Haslam and Rohit Malhotra received Pre-IPO incentives in 2019 amounting to USD 8,150,000 and USD 5,783,000 respectively, with no further performance conditions and phased vesting to 2021.

Fixed salary The Remuneration Committee had proposed a salary increase which was to have been effective from 1 April 2020 for the CEO, taking into consideration his additional responsibility, salary benchmarks and retention challenges in the Fintech sector. The CEO subsequently voluntarily waived his salary increase in light of the COVID-19 pandemic and wider economic impact.

Benefits The benefits offering and operations are in line with local market practice. The benefits for the Executive Directors and the Executive Management Team are aligned to those offered to the employees located in the UAE. Core benefits include: private medical insurance for self, spouse and up to three children, health screening, life insurance and relocation allowances (where applicable). Executive Directors are also eligible for the reimbursement of UK income tax liability incurred in respect of the conduct of their Executive Director duties necessarily performed in the UK.

End of service gratuity As required under the UAE Labour Law for non-UAE nationals, the Executive Directors will be eligible to receive an end of service gratuity payment upon termination. The annual contribution accrued by the Company is based on 21 days’ fixed salary for each of the first five years of service, and 30 days’ fixed salary for each additional year of service. The amounts accrued in respect of this are set out in the single total figure table. There were no additional pension contributions paid to the Executive Directors in FY20.

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Section 2: Annual Report on Remuneration continued

Executive Directors’ remuneration continued Annual Deferred Bonus Plan (‘ADBP’) 2020 annual bonus (audited) The Remuneration Committee reviewed the structure of the annual bonus arrangements and determined that its structure remained appropriate and aligned with FTSE 250 market practice and our sector. To support the Company’s growth journey, performance was intended to once again focus on revenue (45%) and EBITDA (30%). The remaining 25% of the annual bonus was to be reviewed against a scorecard of individual measurable objectives identified as critical to the business strategy development in FY20. The performance targets for FY20 were set prior to the onset of the COVID-19 pandemic, and both Executive Directors agreed to waive any amount payable in respect of FY20. The targets set at the beginning of 2020, for reference, are below:

Figure 2: 2020 annual bonus metrics (audited)

Financial (75%) Performance measures Revenue (USDm) EBITDA (USDm) Weighting 45% 30% Targets 374.4 386 405.3 190 200 210 Payout levels (as a % of max) 25% 50% 100% 25% 50% 100% Outcome (2020 actuals) 284.8 112.6 Performance achieved N/A N/A Bonus achieved (% of max.) N/A N/A Bonus earned (USD’000) 0% 0%

Strategic (25%) Performance Master Transitional Services Key Regional Stakeholder Management Risk, Governance measures Arrangement (‘MTSA’) Markets Growth & People & Internal Audit Weighting 5% 7.5% 5% 7.5% Targets Above Above Above Above Acceptable Expected Strong Acceptable Expected Strong Acceptable Expected Strong Acceptable Expected Strong Payout levels (as a % of max) 20-30% 50-60% 80-100% 13-26% 40-53% 80-100% 13-26% 40-53% 80-100% 13-26% 40-53% 80-100% Outcome (2020 Actuals) N/A N/A N/A N/A Performance achieved N/A N/A N/A N/A Bonus achieved (% of max.) N/A N/A N/A N/A Bonus earned 0% 0% 0% 0%

Figure 3: 2020 performance strategic measures

Strategic measures Performance summary Master Transitional › Separation of shared services from Emirates NBD Bank PJSC on plan and cost targets. Services Arrangement (‘MTSA’) 5%

Key Regional › Completed transition to next generation technology platforms. Markets Growth › Customers migrated. 7.5% › Multiple customer wins. › Progressed our entry to Saudi Arabia market.

Stakeholder › 8 percentage point improvement in Employee Engagement Survey. Management & People 5%

Risk, Governance › Constituted the Enterprise Risks Management Committee (‘ERMC’). & Internal Audit › Completed the annual revision exercise of Group’s principal and emerging risks as part of the risk disclosure required for 7.5% the Annual Report and Accounts (‘ARA’) for 2020.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 141

Long Term Incentive Plan (‘LTIP’) LTIP awards vested in 2020 The first awards under the LTIP were granted in 2019 and will vest in 2022, subject to the achievement of the performance criteria measured over the period up to 31 December 2021.

Figure 4: 2020 LTIP awards granted (audited) LTIP awards were granted on 19 August 2020 as conditional share awards. It was pre-determined that the share price used to calculate the number of shares awarded would be the higher of the IPO offer price of £4.35 (which is the same share price as the 2019 LTIP awards) or the average share price calculated over a period of up to 30 trading days prior to the date of grant. The £4.35 share price was used to ensure that Executives did not receive a benefit from a fall in the Company’s share price shortly before the date of grant. The conditional share awards will vest three years after the award grant date, to the extent that the Remuneration Committee is satisfied that the performance conditions to 31 December 2022 have been met. Malus provisions apply to the end of the vesting period, and clawback provisions apply for two years following vesting. Any dividend accrual during the performance period and expiry of the holding period may be awarded in the form of additional shares.

Percentage of Basis of Face value award vesting at End of Award award Shares of award2 threshold performance Executive Director1 type % awarded (USD’000) performance period Rohit Malhotra LTIP – conditional Base Award – 200% 160,369 860,225 25% 31/12/2022 shares of fixed salary Kicker – 100% of 80,185 430,115 0% 31/12/2022 fixed salary

1 Simon Haslam declined to accept an LTIP grant in 2020. 2 The face value of the award is based on the closing share price on the date prior to the award (£4.09). The conversion USD exchange rate used is 1.3115 which is based on an average of over five trading days prior to the date of grant.

Figure 5: 2020 LTIP award performance conditions (audited) As disclosed to shareholders following the grant of the 2020 LTIP awards in August, the Remuneration Committee decided to defer the setting of performance targets. This was to ensure that the performance targets would be appropriately stretching and commensurate with the Group strategy. The approved performance conditions for the 2020 LTIP award are: i) Adjusted Earnings per Share (‘EPS’); ii) Revenue; and iii) Relative Total Shareholder Return (‘TSR’). In addition to these performance conditions, the kicker element of the award is subject to an absolute TSR performance measure. The award is also subject to an ROCE underpin.

The Remuneration Committee views EPS and Revenue as measures which are key to support the delivery of the future strategy of the Company. TSR is measured against the FTSE 250 index, reflecting the Company’s positioning on the London Stock Exchange. 25% of the award will vest for threshold performance increasing on a straight-line vesting between threshold and maximum (100%). Targets outlined in the table below take into account market consensus, current budget estimates and market practice around metric calibration for UK listed companies.

Threshold Maximum Metrics Weighting (25% vesting) (100% vesting) Adjusted EPS 50% 18.27c 20.53c Revenue 25% $386.1m $441.9m Relative TSR 25% Median Upper Quartile Absolute TSR Share price + dividends paid must be at least £7.50p at the end of the performance period, and the Kicker other performance criteria to be met in full, then award increases by 50% ROCE Underpin – reduction to levels of vesting by 10% if not met 14.0% ROCE achieved in FY22 (excluding DPO acquisition)

2021 LTIP awards Noting that this is the first LTIP award for the new CEO and the enhanced award is intended to improve alignment with shareholders by creating an opportunity to acquire shares based on the achievement of stretching performance targets. For the 2021 LTIP, the Remuneration Committee proposes to grant the Executive Directors an award of 300% of fixed salary for CEO and 200% for the CFO.

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Section 2: Annual Report on Remuneration continued

Executive Directors’ remuneration continued It is proposed that the 2021 LTIP awards will be conditional on the achievement of adjusted EPS (50%), revenue (25%) and relative TSR (25%) performance metrics, consistent with the 2020 LTIP award excluding the kicker element. The Remuneration Committee also agreed to underpin Return on Capital Employed (‘ROCE’) similar to the 2020 awards.

Details of the performance targets attached to the 2021 LTIP will be announced prior to the AGM on 20 May 2021 by release of an RNS announcement.

Pre-IPO incentives Figure 6: IPO cash bonus and MIP awards Network International LLC awarded selected members of the Group’s management, including the Executive Directors, cash bonus awards subject to and conditional upon listing. Details of these awards for the CEO were disclosed in the single figure total table in the 2019 DRR. The CFO’s award terms and vesting schedules are identical to those awarded to the CEO. The full value of these awards in 2019 amounted to USD 8,150,000 and USD 5,783,000 for the CEO and CFO respectively, with no further performance conditions and phased vesting to 2021. These values include USD 393,000 vesting in 2020 for the CEO, and USD 356,000 for the CFO.

2020 IPO Cash Bonus awards to shares conversion No new awards will be made under the pre-IPO incentive plans. As per shareholder approval at last year’s AGM, vesting of the portion of the remaining cash payments equivalent to 200% of the Executive Directors’ fixed salary was accelerated on the condition that the cash was used by the Executive Directors to purchase shares in the Company at a price of £4.10, which is equal to the share price at which equity was raised through an accelerated book building process.

This is considerably higher than the actual share price at the time of the transaction on 7 September 2020. The acquired shares will be subject to a holding period and released in October 2021 on the same terms and conditions as the relevant portion of the pre-IPO cash awards for which vesting was accelerated. However, the Executive Directors will be encouraged to retain their shares over a longer period of time, as the purchased shares will count towards the shareholding requirement of 300% of fixed salary. The conversion of awards to shares will enable the Executive Directors to meet their shareholding requirements earlier, thus enhancing the alignment of Executive Directors’ interests with those of shareholders.

Details of the number of shares acquired by each Executive Director are set out below:

IPO cash award (2021 Tranche) Executive Director to share conversion (Shares) Simon Haslam 200,295 Rohit Malhotra 167,536

Figure 7: Executive Directors’ shareholding and share interests (audited) The DRP requires Executive Directors to hold shares equivalent in value to 300% of their fixed salary within a five-year period from their appointment date. The Executive Directors committed to purchasing shares in the Company at the prevailing market price using the accelerated portion of the MIP and IPO cash bonus awards, equal to 200% of fixed salary. This took place on 7 September 2020. The purchased shares will count towards the 300% shareholding requirement.

Additionally, in relation to the 2019 annual bonus payout, an award of deferred shares equal to 7.5% of maximum, or 15% of fixed salary, was made shortly after the 2020 AGM, and those shares also count towards the shareholding requirement. Unvested With With Without Without performance performance performance performance Shareholding conditions conditions conditions conditions2 Shareholding Shareholding requirement requirement % Shares IPO cash bonus (% of fixed met (of fixed beneficially conversion Executive Director1 salary)1 salary)2,3 owned LTIP-2019 LTIP-2020 ADBP – shares to shares)3 Simon Haslam 300% 159% 50,926 145,479 – 15,683 200,295 Rohit Malhotra 300% 141% 20,000 95,803 240,554 9,226 167,536

1 For the purposes of the shareholding requirement, only the net number of unvested share awards not subject to performance conditions is included, in line with institutional investor guidelines. 2 The shareholding requirement calculation is based on annualised fixed salary. 3 The closing share price of £3.266 as at 31 December 2020 has been used for the purpose of calculating the current shareholding as a percentage of salary.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 143

Payment to past Directors/payment for loss of office (audited) There were no payments to past Directors or payments for loss of office in FY20 or FY19.

Figure 8: Performance and Executive Directors’ remuneration The graph below illustrates the Company’s Total Shareholder Return (‘TSR’) performance against the FTSE 250 for FY20. The FTSE 250 was selected as the appropriate comparator as the Company is a constituent of the index. The graph shows the performance of a hypothetical £100 investment over that period. The remuneration data for the Executive Directors is set out in the table below the TSR chart.

160

140

120

100

TSR since IPO 80

40 Apr 19 Jun 19 Aug 19 Oct 19 Dec 19 Feb 20 Apr 20 Jun 20 Aug 20 Oct 20 Dec 20

Network International FTSE-250

Data sourced from DataStream from Refinitiv.

Total remuneration of Executive Directors

Total single figure Total single figure remuneration remuneration Total single figure Annual bonus LTIP (fixed pay) (variable) remuneration payment vesting Year (USD’000) (USD’000) (USD’000) (% of maximum) (% of maximum) Simon Haslam FY20 585 0 585 0.0% n/a FY19 From 27/02/2019 (appointment date) 494 8,682 9,176 115% n/a Rohit Malhotra From 02/06/2020 (appointment date) 288 0 288 0.0% n/a

Annualised figures

Total single figure Total single figure remuneration remuneration Total single figure Annual bonus LTIP (fixed pay) (variable) remuneration payment vesting Year (USD’000) (USD’000) (USD’000) (% of maximum) (% of maximum) Simon Haslam FY19 584 8,779 9,363 115% n/a Rohit Malhotra FY20 488 0 488 0.0% n/a

Network International Holdings Plc Annual Report and Accounts 2020 144

Directors’ Remuneration Report continued

Section 2: Annual Report on Remuneration continued

Percentage change in remuneration of Directors and employees The table below shows the percentage change in the remuneration of Directors and the average UAE colleague for FY20.

Bonus Salary or fees1 Benefits2 (% change from (% change from (% change from 2018/19 to FY19 to FY20) FY19 to FY20) 2019/20) Executive Directors Simon Haslam 0.0% 9.1% -100.0% Rohit Malhotra N/A N/A N/A Non-Executive Directors Ron Kalifa 3.3% 0.0% 0.0% Darren Pope 0.0% 0.0% 0.0% Victoria Hull -4.8% 0.0% 0.0% Ali Mazanderani N/A N/A N/A Anil Dua N/A N/A N/A Habib Al Mulla 4.2% 0.0% 0.0% Suryanarayan Subramanian 1.6% 0.0% 0.0% Daniel Zilberman3 0.0% 0.0% 0.0% Shayne Nelson3 0.0% 0.0% 0.0% Aaron Goldman3 0.0% 0.0% 0.0% Comparator group Average UAE Colleague4 6.0% 20.9% -10.2%

1 The percentage changes have been calculated using the salary or fees, benefits and short-term incentives as set out in the single total figure table for FY19 and FY20. For Directors these reflect the actual amounts earned whilst they were on the Board for each year, and include the 25% fee reduction in 2020 where applicable. For Rohit, Ali and Anil no comparisons are available as they were appointed to the Board in FY20. 2 Gratuity has been excluded. 3 These individuals stepped down from the Board on 30 April 2020 which is prior to the date when fees were reduced. For comparison, fees have been annualised. 4 The CEO and CFO end of service gratuities have been excluded as they are not actually paid/received during the year. Average UAE Colleague data is based on methodology ‘C’ i.e. 2019 v/s 2018 for UAE. Gratuity is not included.

Indicative CEO pay ratio Similar to the gender pay gap, the Company is exempt from the CEO pay ratio legislation as there are fewer than 250 employees in the UK. However, a CEO pay ratio is considered when determining senior remuneration, and is being disclosed voluntarily to provide information about the appropriateness of pay outcome, to consider wider workforce remuneration and to ensure transparency. The CEO’s total pay, as per the FY20 single total figure remuneration, is compared to the total pay of the UAE-based employees as they represent the majority of our workforce and they share the same legal, tax and currency context for pay and benefits as the CEO. The calculation is based on methodology C of the regulations.

The table below discloses the CEO’s total pay as compared to that of the UAE-based workforce at the 25th percentile, median and 75th percentile, and we will build on it each year accompanied by a narrative to explain any changes.

25th percentile Median 75th percentile Year Method pay ratio pay ratio pay ratio 2020 (excl. Pre-IPO incentives) C 13:1 8:1 5:1

25th percentile Median 75th percentile Year Method pay ratio pay ratio pay ratio 2019 (excl. Pre-IPO incentives) A1 26:1 16:1 10:1

1 As committed in the 2019 DRR, 2019 figures have been restated using Methodology A, excluding pre-IPO incentives.

Relative importance of the spend on pay (audited) The table below indicates how the earnings of Executive Directors compare with other financial disbursements.

FY201 FY19 (USD’000) (USD’000) Distributions to shareholders by way of dividend2 0 0 Total tax contributions3 6,058 10,415 Overall spend on pay including Executive Directors4 96,933 96,744

1 Calculated on the same basis as the single total figure of remuneration on page 139. 2 Dividends to shareholders include interim and final dividends paid in each financial year. 3 As set out in the consolidated statement of cash flow (see note 24 of the financial statements for further information). 4 Employee costs includes wages and salaries, social security, pension and share-based costs at actual exchange rates (see note 20 of the consolidated financial statements for further information).

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 145

For every $1 spent on Executive Directors’ remuneration by the Company in FY20, $0 was made in dividend payments, $6.9 was paid in tax and $111 was spent on employee costs.

Fees retained for external Non-Executive Directorships Executive Directors may hold positions in other companies as Non-Executive Directors (‘NEDs’) and retain the fees. Neither Executive Directors held a NED position with another company in FY20 or FY19, and as such no fees for external appointments are being reported.

Non-Executive Directors’ remuneration Figure 9: 2020 Non-Executive Directors’ single total figure table (audited) The table below sets out the single total figure of remuneration for each Non-Executive Director in FY20.

End of Sub-Total Annual LTIP service Pre-IPO Sub-Total (variable Non-Executive Fees1 Benefits2 bonus vested gratuity incentives (fixed pay) pay) Total3 Director Year (GBP’000) (GBP’000) (GBP’000) (GBP’000) (GBP’000) (GBP’000) (GBP’000) (GBP’000) (GBP’000) Ron Kalifa FY20 375 12 N/A N/A N/A N/A 387 0 387 (Chairman) From 363 12 N/A N/A N/A N/A 376 0 376 13/03/2019 to 31/12/2019 Darren Pope FY20 129 N/A N/A N/A N/A N/A 129 0 129 (Senior From 129 N/A N/A N/A N/A N/A 129 0 129 Independent 13/03/2019 Director) to 31/12/2019 Victoria Hull FY20 100 N/A N/A N/A N/A N/A 100 0 100 From 105 N/A N/A N/A N/A N/A 105 0 105 13/03/2019 to 31/12/2019 Habib FY20 75 N/A N/A N/A N/A N/A 75 0 75 Al Mulla From 72 N/A N/A N/A N/A N/A 72 0 72 29/03/2019 to 31/12/2019 Ali Haeri From 70 N/A N/A N/A N/A N/A 70 0 70 Mazanderani 22/01/2020 to 31/12/2020 Anil Dua From 66 N/A N/A N/A N/A N/A 66 0 66 22/01/2020 to 31/12/2020 Suryanarayan FY20 62 N/A N/A N/A N/A N/A 62 0 62 Subramanian From 61 N/A N/A N/A N/A N/A 61 0 61 13/03/2019 to 31/12/2019 Aaron FY20 25 N/A N/A N/A N/A N/A 25 0 25 Goldman From 61 N/A N/A N/A N/A N/A 61 0 61 13/03/2019 to 31/12/2019 Daniel FY20 25 N/A N/A N/A N/A N/A 25 0 25 Zilberman From 61 N/A N/A N/A N/A N/A 61 0 61 13/03/2019 to 31/12/2019 Shayne FY20 25 N/A N/A N/A N/A N/A 25 0 25 Nelson From 61 N/A N/A N/A N/A N/A 61 0 61 13/03/2019 to 31/12/2019

1 2020 fees are based on actual amounts earned in the year and include the temporary 25% reduction in fees. 2 Relates to a payment for the purposes of obtaining private health insurance. 3 No other item of remuneration received in FY20 other than as disclosed in the table.

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Section 2: Annual Report on Remuneration continued

Figure 10: Non-Executive Directors’ shareholding (audited) The NEDs do not participate in any of the Company’s incentive arrangements. There is no shareholding requirement policy in place for NEDs.

The table below indicates the shareholding of the NEDs as at 31 December 2020, including those held by connected persons.

Number of shares Number of shares held as at held as at Non-Executive Director 31 December 2020 31 December 2019 Ron Kalifa 599,156 564,156 Darren Pope 8,824 0 Victoria Hull 66,319 0 Habib Al Mulla 0 0 Suryanarayan Subramanian 0 0 Ali Haeri Mazanderani 44,290 0 Anil Dua 0 0

Figure 11: Directors’ agreements for service Non-Executive Directors (‘NEDs’) The appointments of each of the NEDs are for an initial term of three years from the date of appointment until the conclusion of the Company’s AGM occurring approximately three years from that date, unless terminated by either party on three months’ notice, in the case of the Independent NEDs, and one month’s notice in the case of the Non-Independent NEDs. The appointment of each Independent Non-Executive Director is also subject to annual re-election at the general meeting of the Company.

Date of Non-Executive Director Title appointment Notice period Unexpired term1 Ron Kalifa Independent Board Chair 13-Mar-19 3 months 1 year 4 months Darren Pope Senior Independent Non-Executive Director 13-Mar-19 3 months 1 year 4 months Victoria Hull Independent Non-Executive Director 13-Mar-19 3 months 1 year 4 months Habib Al Mulla Independent Non-Executive Director 29-Mar-19 3 months 1 year 4 months Suryanarayan Subramanian Non-Executive Director 13-Mar-19 1 month 1 year 4 months Ali Haeri Mazanderani Independent Non-Executive Director 22-Jan-20 3 months 2 years 4 months Anil Dua Independent Non-Executive Director 22-Jan-20 3 months 2 years 4 months

1 From January 2021.

Executive Directors The Remuneration Committee’s policy for setting notice periods for Executive Directors is that a six-month period will apply unless the Remuneration Committee determines that 12 months would be more appropriate in the circumstances. The Remuneration Committee may, in exceptional circumstances arising on recruitment, allow a longer period, which would in any event reduce to either six or 12 months following the first year of employment.

The Company can immediately terminate employment by making a payment in lieu of notice period, or in exceptional circumstances (e.g. misconduct). Post-termination restrictions can be applied for up to 12 months following the cessation of employment.

Date of Executive Director Title appointment Notice period Simon Haslam Outgoing CEO 27-Feb-2019 6 months Nandan Mer Group Chief Executive Officer 1-Feb-2021 6 months Rohit Malhotra Group Chief Financial Officer 2-Jun-2020 6 months

Report on the Remuneration Committee Remuneration Committee remit The Remuneration Committee’s Terms of Reference can be found on our website at (investors.networkinternational.ae/ investors/corporate-governance). In summary, the Remuneration Committee makes recommendations to the Board regarding the Company’s policy relating to Executive remuneration and its cost, giving full consideration to the matters set out in the Corporate Governance Code. It determines on the Board’s behalf, the entire individual remuneration packages for each Executive Director, the Chair of the Board and the Executive Management Team. The Remuneration Committee meets at least five times each year and otherwise as the Chair of the Remuneration Committee requires.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 147

Figure 12: Remuneration Committee composition and meetings The table below indicates the number of meetings held during 2020 and Remuneration Committee member attendance.

FY20 Number of % of meeting Member Member since meetings meetings attended1 attendance Victoria Hull 13 March 2019 8 8 100% Habib Al Mulla2 29 March 2019 5 5 100% Ron Kalifa 13 March 2019 8 8 100% Darren Pope2 13 March 2019 5 5 100% Ali Haeri Mazanderani3 22 January 2020 8 7 88%

Figure 13: Remuneration Committee activity The following table is a summary of the Remuneration Committee’s activity during FY20. The Remuneration Committee typically meets a minimum five times a year. During FY20, the Remuneration Committee met eight times at scheduled meetings.

The agenda items discussed at the meetings are summarised below.

February 2020 › Update on the FY19 bonus outturn › Review of CEO/CFO remuneration for 2020 › Update on FY20 performance conditions › Update on DRR progress and review draft DRR › Review of FY20 DRP › Approval of Executive Directors’ salary increases › Approval of FY20 annual bonus metrics › Approval of LTIP base awards for Executive Directors › Approval of cash to equity conversion › Update on shareholder engagement process March 2020 › Update on shareholder consultation process › Update on 2020 LTIP ROCE approach › Approval of the DRR › Approval of amended LTIP rules › Approval of FY20 annual bonus targets › Consideration of FY20 LTIP targets › Approval of shareholders’ letters and RNS › Approval of 2019 Annual Deferred Bonus › Approval of IPO bonus shares acquisition & dividends June 2020 › Approval of the amended LTIP and ADBP rules › Approval of treatment of dividends related to deferred share awards › Approved NLT senior management & ‘below NLT’ Long-Term Incentive Strategy › Update on Board approach to employee engagement August 2020 › Approval of the 2020 LTIP awards for CFO & NLT senior management. › Approval of the IPO bonus shares acquisition share price › Approval of Board approach to employee engagement › Approval of Remuneration Committee’s approach to workforce engagement on Executive pay October 2020 › Approval of 2020 LTIP targets › Approval of the retention proposal for NLT senior management team › Update on workforce engagement on Executive Pay Communications Plan › Update on DRR timeline › Approval of the CFO Director Fees & Tax Proposal › Update on Employee Engagement Survey & HR Response to COVID-19 December 2020 › Update on 2020 annual bonus approach › Update on 2020 annual Pay Review approach › Approval of the 2021 annual bonus measures and structure › Approval of the 2021 LTIP measures and structure › Revised update on DRR timeline › Approval of remuneration package for incoming CEO and MD Middle East › Approval of termination package for current CEO and MD Middle East

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Directors’ Remuneration Report continued

Section 2: Annual Report on Remuneration continued

Figure 14: Statement of voting The table below sets out last year’s voting outcomes including the Remuneration Policy which was approved by shareholders at the AGM on 30 April 2020.

% of Votes Votes Votes Votes Votes Issued Share Votes “For” “For” % “Against” “Against” % Total Capital Voted “Withheld” Remuneration Policy (Binding) 426,988,793 96.59% 15,089,568 3.41% 442,078,361 88.42% 10,890,205 Remuneration Report (Advisory) 426,177,846 99.07% 4,007,859 0.93% 430,185,705 86.04% 22,782,861

Remuneration Committee advisors and other attendees The Remuneration Committee is authorised to obtain external advice from independent consultants where it considers it appropriate in carrying out its responsibilities. During FY20, PwC advised the Remuneration Committee on all aspects of the Remuneration Policy for the Executive Directors and members of the Executive Management Team, including the development of the policy prior to the IPO. PwC was appointed prior to listing following a selection process. PwC is a member of the Remuneration Consultants Group and the voluntary code of conduct of that body is designed to ensure objective and independent advice is given to remuneration committees. Fees of £144,108 were paid to PwC during the year in respect of remuneration advice received, accrued on a time and expenses basis. PwC provides other services to the Company, in relation to accounting, tax advice, reporting, internal audit and risk management. The Remuneration Committee is satisfied that no conflicts of interest in regards to advice provided to the Remuneration Committee exist. It is also satisfied that the members of PwC team do not have connections with the Company which might impair their independence. Allen & Overy LLP also provided advice on legal matters, such as the contractual terms of the incentive plan rules, and compliance with legal and regulatory requirements in the operation and reporting of incentive arrangements.

The Remuneration Committee also seeks internal support from the CEO, Chairman, Chief Risk Officer and Group Company Secretary, Group Head of Human Resources and Facilities, and Principal Reward Consultant as necessary and appropriate. All may attend the Remuneration Committee meetings by invitation, although none of them are present for any discussions on their own remuneration.

Victoria Hull Chair of the Remuneration Committee 7 March 2021

This DRR has been prepared in accordance with the relevant provisions of The Companies Act 2006, The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, The Companies (Miscellaneous Reporting) Regulations 2018, Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and the Listing Rules. Where required data has been audited by KPMG and this is indicated appropriately.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 149

Directors’ Report – Other Statutory Disclosures

The Directors present their report for the financial year ended 31 December 2020.

Information included in the Strategic Report As permitted by legislation, the following matters which would otherwise be required to be included in the Directors’ Report have instead been included in the Strategic Report on pages 14 to 69:

Subject matter Page reference Likely future developments in the business 14

Research and development 36

Employment of disabled persons 61

Employee engagement 62

Relationships with suppliers, customers and others 28

Disclosures concerning greenhouse gas emissions 66

Diversity 60

Energy consumption and carbon emissions 66

Corporate Governance Statement The information that fulfils the requirements of the corporate governance statement for the purposes of the FCA’s Disclosure Guidance and Transparency Rules can be found in the Corporate Governance Report on pages 90 to 112 and the Strategic Report on pages 1 to 89 (which are incorporated into this Directors’ Report by reference) and in this Directors’ Report.

Cautionary statement This Annual Report has been prepared for and only for the members of the Company, as a body, and no other persons. The Company, its Directors, employees, agents or advisors do not accept or assume responsibility to any other person to whom this document is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. By their nature, the statements concerning the risks and uncertainties facing the Group in this Annual Report involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this Annual Report and the Company undertakes no obligation to update these forward- looking statements. Nothing in this Annual Report should be construed as a profit forecast.

Disclosure of information under LR 9.8.4R The information that fulfils the reporting requirements relating to the following matters can be found on the pages identified:

Subject matter Page reference Arrangements under which the employee benefit trust has waived or agreed to waive dividends/future dividends 151

Share capital The structure of the issued share capital of the Company as at 31 December 2020 and information about the issue of shares during 2020 are set out in note 18 (on page 200) to the financial statements. The Company has one class of share: ordinary shares of £ 0.10 each.

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Directors’ Report – Other Statutory Disclosures continued

Issue and buy-back of shares 1. Issue of shares The Directors were granted authority on 30 April 2020 to allot shares in the Company: (i) up to one third of the Company’s issued share capital; and (ii) up to a further one third of the Company’s issued share capital in connection with a rights issue.

The Directors were also granted authority on 30 April 2020 to disapply pre-emption rights. This authority disapplies pre-emption rights over 10% of the Company’s issued share capital.

These authorities apply until the AGM to be held in 2021 or, if earlier, at the close of business on the date falling 15 months after the resolutions conferring them were passed on 30 April 2020. The Board currently intends to seek to renew these powers in line with relevant institutional guidelines at the 2021 AGM.

Pursuant to the authorities given by the shareholders at the AGM held on 30 April 2020, a further 50,000,000 ordinary shares of 10p each in the capital of the Company (representing approximately 10% of the then current issued ordinary shares of the capital of the Company) were issued on 31 July 2020 by way of a non-pre-emptive placing. The gross proceeds raised of approximately £205 million will be used predominantly to fund the acquisition of DPO Group for a total consideration of USD 288 million.

2. Buy-back of shares The Company was granted authority on 30 April 2020 to purchase in the market up to 10% of its issued ordinary shares, subject to certain conditions laid out in the authorising resolution. This authority applies until the AGM to be held in 2021 or, if earlier, at the close of business on the date falling 15 months after the resolution conferring it was passed on 30 April 2020. The Board currently intends to seek to renew this authority at the 2021 AGM.

The Directors did not exercise the authority to make market purchases of shares in the financial period under review.

Shareholder rights The rights attaching to the ordinary shares are governed by the Company’s Articles of Association and prevailing legislation. There are no specific restrictions on the size of a shareholding. Subject to applicable law and the Articles of Association, holders of ordinary shares are entitled to: › receive all shareholder documents, including notice of any general meeting; › attend, speak and exercise voting rights at general meetings, either in person or by proxy; and › participate in any distribution of income or capital.

Restrictions on voting There are no specific restrictions on the shareholders’ ability to exercise their voting rights, save and except in situations where the Company is legally entitled to impose such restrictions (usually where amounts remain unpaid on the shares after request, or the shareholder is otherwise in default of an obligation to the Company). Currently all issued shares are fully paid.

Shares held by the Company’s employee benefit trust The Company has established an employee benefit trust to hold shares for satisfying the awards made under its employee share plans. The Deed of Trust requires the trustees to abstain from voting on the shares held in trust at any general meeting of the Company.

Restrictions on the transfer of ordinary shares Ron Kalifa, Chairman, has an interest in 564,156 ordinary shares in the Company that were acquired pursuant to the terms of the consultancy agreement entered into on 13 March 2019 between WP/GA and RMK Consulting Services Ltd., a company wholly owned by Mr Kalifa. Further details in respect of these shares and the consultancy agreement are disclosed in the Remuneration Report on page 146. The 564,156 shares held by RMK Consulting Services Ltd may not be transferred to any party during the period of three years following 10 April 2019 being the date when the shares were admitted to trading on the London Stock Exchange.

The transfer of ordinary shares is governed by the general provisions of the Company’s Articles of Association and prevailing legislation. There are no restrictions on the transfer of the ordinary shares other than: (i) as set out in the consultancy agreement described in the preceding paragraph; (ii) as set out in the Articles of Association; and (iii) certain restrictions which may from time to time be imposed by laws and regulations (for example insider trading laws and regulations, which prohibit the transfer of shares by Directors, officers and employees at certain times and otherwise require such individuals to obtain approval to deal in the ordinary shares in the Company in accordance with the Company’s share dealing rules).

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 151

Notifiable interests in voting rights At 31 December 2020, and updated as at 1 March 2021, the Company had been notified of the following interests in voting rights over the issued share capital of the Company:

As at 31 December 2020 As of 1 March 2021 Number of % interest in Number of % interest in Nature of Shareholder voting rights voting rights voting rights voting rights Interest The Capital Group Companies, Inc 67,510,165 12.27 83,684,865 15.22 Indirect Mastercard UK Holdco Limited 49,950,000 9.08 49,950,000 9.08 Direct Harding Loevner LP 30,942,257 5.63 25,572,878 4.65 Direct Emirates NBD Bank PJSC 28,634,626 5.21 28,634,626 5.21 Direct Wellington Management Group LLP 26,735163 4.86 26,735,163 4.86 Indirect

Information provided to the Company under the Disclosure Guidance and Transparency Rules is publicly available via the regulatory information service and on the Company’s website.

As at 1 March 2021, no Directors and/or their connected persons had an interest in 3% or more of the voting rights of the Company.

Dividends In view of the ongoing COVID-19 situation, the Board took the prudent step (announced on 2 April 2020) of deferring the previously announced proposed final dividend in respect of 2019. No dividends were paid during the year. The Directors do not recommend the payment of a dividend in respect of the financial year ended 31 December 2020.

Directors’ appointments The names of the current Directors, the date on which each was appointed and the unexpired term of Service Contract for each Director are disclosed in the Remuneration Report on page 146.

The appointment and replacement of Directors is governed by the Company’s Articles, the UK Corporate Governance Code, the UK Companies Act 2006 and related legislation. Directors may be appointed by the Board, on the recommendation of the Nomination Committee, or by the Company by ordinary resolution.

All Directors are subject to the election or re-election by shareholders at each Annual General Meeting.

Further information on the appointments to the Board is set out in the Corporate Governance Report on page 106.

Directors’ conflicts of interest Directors are under a duty to declare any conflict or potential conflict of interest that may arise from time to time. The Board considers and may authorise any conflict or potential conflict as appropriate. Directors with a conflict do not participate in the discussion or vote on the matter in question. More details on how the Directors’ conflicts of interest are addressed are in the Governance Report at page 107.

Powers of the Directors Subject to the Company’s Articles of Association, the prevailing legislation and any directions by special resolution, the business and affairs of the Company are managed by the Directors. Details of the current authorities to issue and buy back shares are set out on page 150.

Qualifying third-party indemnity and Directors’ and Officers’ Liability Insurance In accordance with its Articles of Association, the Company has granted a qualifying third-party indemnity, to the extent permitted by law, to each Director and the Group Company Secretary. The Company also maintains Directors’ and Officers’ Liability Insurance.

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Directors’ Report – Other Statutory Disclosures continued

Significant agreements (change of control) The common terms agreement dated 10 May 2016 (amended on 18 March 2019 and 7 August 2019) for a term facility entered into by one of the subsidiaries of the Company and various lenders, to which the Company also acceded as a guarantor along with other Group companies, provides for the ability to individual lenders to cease funding further utilisation requests, and to seek repayment of all sums funded by them together with interest and other amounts payable, on 10 business days’ notice in the event of (i) any person or group of persons acting in concert (other than ENBD and WP/GA) acquiring (directly or indirectly) equity share capital having the right to cast more than 30% of the votes capable of being cast in general meetings of the said subsidiary or the Company; or (ii) any sale of all or substantially all of the businesses or assets of the Network International Group.

The revolving credit facility agreement dated 31 October 2019 entered into by one of the subsidiaries of the Company and various lenders, to which the Company is also a signatory along with other Group companies as a guarantor, provides for the ability to individual lenders to cease funding further utilisation requests, and to seek repayment of all sums funded by them together with interest and other amounts payable, on 10 business days’ notice in the event of (i) any person or group of persons acting in concert (other than ENBD and WP/GA) acquiring (directly or indirectly) equity share capital having the right to cast more than 30% of the votes capable of being cast in general meetings of the said subsidiary; or (ii) any sale of all or substantially all of the businesses or assets of the Network International Group.

In addition there are a number of agreements that take effect, alter, or terminate upon a change of control of the Company. None are considered to be significant in terms of the Group as a whole.

Compensation for loss of office Information in respect of Directors’ remuneration, including any contractual arrangements on termination of employment, is disclosed in the Remuneration Report on page 139.

Financial instruments In relation to the use of financial instruments by the Company, information in respect of: a) the financial risk management objectives and policies of the Company, and b) the exposure of the Company to credit risk, liquidity risk, market risk and operational risk, is disclosed in the financial statements on pages 212 to 216.

Suppliers’ payment policy Terms of payment are agreed with individual suppliers prior to supply. The Group aims to pay its suppliers promptly, in accordance with terms agreed for payment, provided the goods or services have been provided in accordance with the agreed terms and conditions.

Future developments An indication of likely future developments in the business of the Company are included in the Strategic Report on pages 14 to 19.

Branches outside the UK The Company does not have any branches outside the UK. The Company has a number of subsidiary companies that are operating in different countries in which they have been incorporated.

Donations In line with the Company’s policy, no political donations were made, and no political expenditure was incurred during the year.

Details of the Group’s charitable activities are included in the Strategic Report on page 68.

Amendment of Articles of Association The Company’s Articles of Association may be amended by special resolution of shareholders. The Company’s Articles of Association adopted by shareholders with effect from 10 April 2019, being the date of the IPO and the admission of shares traded on the London Stock Exchange, are available on the Company’s website.

Going Concern and Viability Statements The statements required to be included in the Annual Report following UK Corporate Governance Code provisions 30 and 31 can be found on pages 155 to 158 respectively and are incorporated into this Directors’ Report by reference.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 153

Disclosure of information to auditors In accordance with Section 418 of the Companies Act 2006, each person who is a Director of the Company as at the date of approval of this report confirms that: › so far as the Director is aware, there is no relevant audit information of which the Group’s auditors are unaware; and › the Director has taken all the steps that he or she ought to have taken as a Director in order to make him/herself aware of any relevant audit information and to establish that the Group’s auditors are aware of that information.

Statement of Directors’ responsibilities The Directors are responsible for preparing the Annual Report and Accounts and the Group and Parent Company financial statements in accordance with applicable law and practice.

Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year.

Under that law they are required to prepare the Group financial statements in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and applicable law and have elected to prepare the Parent Company financial statements in accordance with UK accounting standards and applicable law, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. In addition the Group financial statements are required under the UK Disclosure Guidance and Transparency Rules to be prepared in accordance with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union (‘IFRS as adopted by the EU’). In addition the Group financial statements were also prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IFRS as issued by the IASB’).

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing each of the Group and Parent Company financial statements, the Directors are required to: › Select suitable accounting policies and then apply them consistently; › Make judgements and estimates that are reasonable and prudent; › For the Group financial statements, state whether they have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and, as regards the Group financial statements, International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union (‘IFRS as adopted by the EU’), and International Financial Reporting Standards as issued by International Accounting Standards Board (‘IFRS as issued by the IASB’); › For the Parent Company financial statements, state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the Parent Company financial statements; › Assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and › Use the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration report and Corporate Governance statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

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Directors’ Report – Other Statutory Disclosures continued

Responsibility statement of the Directors in respect of the Annual Report We confirm that to the best of our knowledge: › The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and › The Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy.

The Directors’ Report has been approved and is signed by order of the Board by:

Nandan Mer Chief Executive Officer 7 March 2021

Registered Office: Suite 1, 3rd Floor, 11-12 St James’s Square, London, SW1Y 4LB United Kingdom

Registered number: 11849292

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Viability statement

Viability statement In accordance with provision 31 of the 2018 UK Corporate Governance Code, the Directors have assessed the Group’s prospects over a period longer than the 12 months required by the Going Concern statement.

Viability timeframe: The Directors have assessed the Group’s viability over a period of three years from 31 December 2020. This period was selected as an appropriate timeframe based on the following rationale: › This time horizon is captured by our business planning cycle and a period during which principal risks (particularly those of an operational nature over which we have more control) typically develop; › The three-year period is also in line with long-term management incentive plan; › The continuously innovating nature of the industry makes it difficult to predict with sufficient confidence how competition, customer demand delivery mechanisms and other risks will evolve beyond a three-year timeframe; and › The continuing changing macroeconomic and political environment, globally and regionally, presents greater uncertainty into a forecasting period longer than three years.

Whilst the Directors have no reason to believe the Group will not be viable over a longer period than three years, we believe that a three-year period presents shareholders with a reasonable degree of confidence, while providing a longer-term perspective.

Assessment of prospects: The Group gets a significant portion of its recurring revenues through long-term contracts with its diversified portfolio of clients and aims at stable low to mid teen revenue growth strategy, as evidenced both by its past performance, resilience and the position it occupies in the market.

The key factors supporting the Group’s prospects are: › Long-term, loyal, blue-chip clients – Over the past 20 years, the Group has built long-standing and trusted relationships with many of the leading merchants, financial institutions and card issuers operating in the MEA region. The Group’s clients, on the Merchant Solutions side, include more than 80,000 merchants, and on the Issuer Solution side, more than 200 leading financial institutions in its region of operations. › Proprietary technology – The Group has developed its own independent, integrated, reliable and highly secure next generation technology platforms, Network One and Network Lite, which serve both our Issuer and Merchant Solutions business lines. Both principal platforms comprise core authorisation and card management systems from commercial off-the-shelf providers to benefit from leading international technologies, which have been fully integrated and tailored to the markets and regions in which the Group operates. › Leadership position – We are the leading enabler of digital commerce across the Middle East and Africa (‘MEA’) region, which is the world’s most underpenetrated payments market. The Group is the only pan-regional provider of digital payments solutions at scale, with presence across the entire payments value chain. The Group sits at the heart of the MEA payments ecosystem and operates a deeply entrenched network driving adoption of digital payments across the region. › The Group’s management team, which includes executives with regional and international experience, has been instrumental in developing the Group into a leading digital payments provider in the MEA region. The members of the Group’s management team have extensive industry experience in the financial services, payments and technology sectors and a track record of execution at leading organisations regionally and internationally.

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Viability statement continued

Assessment process and key assumptions The Group’s prospects are assessed primarily through its strategic and financial planning process. This includes preparation of a detailed Group budget based on zero based budgeting. This process is led by the Group‘s Chief Executive Officer and Chief Financial Officer, in conjunction with divisional and functional management teams. The Board participates fully in the annual process to review, challenge and approve the annual operating budget. The output of the annual budget process is a set of objectives, and a clear explanation of the key assumptions and risks to be considered when agreeing the plan culminating into a detailed set of financial forecasts. The Group also has a long-term strategy in place which helps drive the business forward. The strategy is reviewed and updated on a periodic basis. Detailed financial forecasts for a time horizon of three years are prepared, with the first year of the financial forecast forming the Group’s operating budget in line with overall Group strategy. Business plans for subsequent years are firmed up based on the detailed budget in line with the overall strategic plan. The operating budget is further updated through a rolling forecast process. Progress against financial budgets and key objectives are reviewed in detail on a monthly basis by Group’s management team and the Board. Mitigating actions are taken whether identified through actual trading performance or through the rolling forecast process. The latest budget (for 2021) was reviewed and approved by the Board in December 2020. This budget is based on Group’s current position and its prospects over the forthcoming year, and in line with Group’s stated strategy. However, the proposed acquisition of DPO and specifically the proceeds from the equity raise to fund the acquisition, have been excluded from the scenario analysis, except for the DPO specific scenario, which has been used to illustrate the marginal impact of a poorly executed DPO acquisition on the Group’s viability. The Group’s long-term prospects are guided by the following strategic priorities: › Capitalise on structural market growth and regional adoption of digital payments › Expand customer base › Expand regional leadership position › Leverage technology investment

The Group’s financial forecasts are based on the following key assumptions: › Organic revenue growth of high double digit in 2021 post expected recovery from COVID-19 pandemic; › Improvement in EBITDA margin in 2021 over 2020 as the business continues to recover from the pandemic; › Stable Capex spends on core business post completion of transformation programme; › No dividend payment to the shareholders; › No change in capital structure of the Group (except required for the acquisition of DPO); › Further Revenue and EBITDA upside from growth accelerator opportunities, such as partnership with Mastercard, deeper geographic penetration in Saudi Arabia, large outsourcing opportunities and strategic M&A, which may require additional investment.

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Assessment of viability Although the output of the Group’s strategic and financial planning reflects the management’s best estimate of the future prospects of the business, the Group has also assessed the impact of severe yet possible scenarios. These scenarios are designed to explore the Group’s resilience to the principal risks as set out in the ARA and combinations of correlated risks. The key scenarios tested can be summarised as:

1. Slowdown in card spends due to sluggish market conditions for various reasons including geo-political scenario and impact of COVID-19 pandemic for a longer period impacting both Merchant Solutions and Issuer Solution revenues 2. Data breaches 3. Loss of business/major clients 4. Technological interruption

Slowdown in card spends due to slow Data breaches / Loss of business / Technological Stress testing metrics market activity cyber attack major clients interruption Principal Risks Cyber security – ü – ü Technology resilience – ü – ü Operational resilience – ü – ü Strategy and Business ü ü ü ü People – – ü – Regulatory and Compliance – ü ü ü Geo-political ü – ü – Financial (Liquidity) ü – ü – Fraud – ü – – Credit ü – – – Third party – ü – ü

The results of the stress testing demonstrate that, due to the Group’s cash generation ability and ongoing availability of sufficient liquidity, Network will be able to withstand the impact of both each scenario individually as well as all the scenarios happening simultaneously. The mitigants considered as part of this stress testing include initiatives to be taken to reduce operating expenses, and to minimise capital expenditure. The Board assessed these mitigants as both achievable and proportionate to the stress considered.

While performing the above stress testing, some risks are outside the Group’s control and the potential implications are difficult to predict (i.e. catastrophic risks due to any unforeseen geo-political scenarios or otherwise), and have not been considered in the scenario testing.

Viability Statement Based on the results of their analysis, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period ending 31 December 2023.

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Going Concern Statement

The Directors have adopted the going concern basis in preparing these consolidated financial statements after assessing the principal risks and having considered the impact of COVID-19 on the Group financial performance including under a base case and a severe but plausible downside scenario. The COVID-19 pandemic has significantly impacted the performance of the Group throughout the period, and is discussed in detail in the ‘COVID-19 response’. In making this assessment, the Directors have considered a forecast period of more than 12 months (until June 2022), estimating key performance indicators including revenues, underlying EBITDA, underlying and reported net income, capital expenditure and liquidity position of the Group based upon the known and expected impacts of COVID-19 as of now. The base forecast has been done based on the budget for 2021 approved by the Board. The base forecast excludes the impact of the acquisition of DPO and the proceeds of the equity raise to fund the acquisition. The forecast has been done based on assumptions related to key variables including but not limited to Transaction Processing Volumes (‘TPV’), number of cards hosted and transactions processed, which are the key drivers of the Group revenues and cash flows. Both business lines of Merchant Solutions and Issuer Solutions have been impacted differently by the COVID-19 crisis. In Merchant Solutions, the Group’s revenues are generated through fees dependent upon the value of transactions processed (‘TPV’), as well as through value added services, and overall are very closely correlated to the underlying value of transactions taking place, and hence, significantly impacted with COVID-19 pandemic. While in Issuer Solutions, the Group’s customers are typically financial institutions, where we have multi- year contracts in place and a number of them have contractual minimums. Therefore our revenues for this business line are somewhat correlated to underlying transaction volumes, but have a greater resilience due to the card hosting and contractually fixed elements. During the period, the Group has refinanced the syndicated term lending facility. The loan placement was considerably over subscribed by banks with both global and regional presence. The Group has additional committed revolving credit lines in place. The Group continues to have significant liquidity headroom to meet its financial obligations, as described in the ‘Chief Financial Officer’s Review’ section in the Strategic Report. The Group’s leverage ratio also remains below the maximum threshold prescribed under the financing facility agreement in the base case scenario as well as under the severe but plausible downside scenario as described below. The base forecast has been further stress tested by using a severe but plausible downside scenario, to assess the Group’s resilience against the possible adverse effect of the continued impact of the COVID-19 pandemic on the economy. In the stress scenario, the Directors assumed slower economic recovery as compared to the base case forecast and assumed that recovery of financial performance to the level of 2019 could be delayed until mid-2022. The Group forecasted revenues for 2021 and 2022 under stress scenario assumptions are lower than they would have been prior to onset of the COVID-19 pandemic (2019 revenues: USD 335.4 million). The costs do not go down in the same proportion as the decrease in revenues as a significant proportion of the Group’s cost base is fixed in nature. This also impacts the headroom available in the Group’s leverage ratio. However, with forecast operating cash flow generation and available and committed financing facilities as explained above, the leverage ratio remains below the threshold in the downside scenario. Furthermore, the Directors further assessed and concluded that the proposed acquisition of DPO Group does not materially impact the headroom available in the Group’s leverage ratio under the base case and the severe but plausible downside scenario. Having considered the above factors, the Directors have a reasonable expectation that the Group has adequate resources to remain in operation for at least 12 months from the approval of these consolidated financial statements and therefore continue to adopt the going concern basis in preparing the consolidated financial statements.

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Independent Auditor’s Report to the Members of Network International Holdings Plc

1. Our opinion is unmodified We have audited the financial statements of Network International Holdings plc (‘the Company’) for the year ended 31 December 2020 which comprise the consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of other comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows, Parent Company statement of financial position, Parent Company statement of changes in equity, and the related notes, including the accounting policies in note 2.

In our opinion:

› the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2020 and of the Group’s profit for the year then ended; › the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union (IFRS as adopted by the EU); › the Parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and › the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation to the extent applicable.

Additional opinion in relation to IFRSs as issued by the IASB As explained in note 2 (a) of the consolidated financial statements, the Group, in addition to complying with its legal obligation to apply international accounting standards in conformity with the requirements of the Companies Act, has also applied IFRSs as issued by the International Accounting Standards Board (‘IASB’).

In our opinion the Group financial statements have been properly prepared in accordance with IFRSs as issued by the IASB.

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the Audit and Risk Committee.

We were first appointed as auditor by the Directors on 28 March 2019. The period of total uninterrupted engagement is for the two financial years ended 31 December 2020. We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided.

Materiality: USD 3.0m (2019: USD 4.0m) Group financial statements as a whole 4.7% (2019: 4.3%) of normalised profit before tax

Coverage 93.4% (2019: 88.0%) of Group profit before tax

Key audit matters vs 2019

Recurring risks Revenue recognition on acquiring revenue

Alternative Performance Measures

Recoverability of parent’s investment in subsidiary undertaking

Event driven Going Concern

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Independent Auditor’s Report to the Members of Network International Holdings Plc continued

2. Key audit matters: our assessment of risks of material misstatement Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We summarise below the key audit matters, in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.

Revenue recognition – acquiring revenue – 64% of Merchant Solutions revenue of USD 109.4m (2019: 64% of Merchant Solutions revenue of USD 152.5m) Refer to page 72 of Principal Risks and Uncertainties and page 115 of the Audit and Risk Committee Report.

The risk Our response Data capture: Acquiring revenue is recognised based on Our procedures included: the value and nature of transactions processed and the Control design: Testing IT controls relating to access to rates agreed with merchants and other parties. The value programs and data, program change and development of transactions is extracted from operational IT systems and computer operations in order to address the risk of through which payments are processed. These operational unauthorised changes being made to the operation of IT systems are highly complex in nature. IT application controls. Processing error (IT systems): There is a risk that these Control design and operation: Testing the design, systems may not be configured correctly from the outset implementation and operating effectiveness of IT application such that revenues are calculated incorrectly that data does controls, including controls around customer set up and not correctly flow through the operational IT systems, and changes to master data that are designed to ensure the that unauthorised changes may be made to any of these appropriate rates are assigned to each merchant in the system systems, which may result in the misstatement of revenue. based on signed contract terms. Processing error (finance processes): The output from the Control re-performance: Testing the operating effectiveness operational IT systems is used to calculate and record of the manual controls over the reconciliation of transactions revenue balances. Accurate revenue recognition requires as reported by the IT systems. core finance processes accurately reporting on and reconciling the transactions as reported by the IT systems. Reperformance: On a sample basis vouching items recorded back to source data including:

› Agreeing key system inputs from which the revenue amounts are derived to the source documents to assess the data integrity of these inputs. › Recalculating of the revenue to be recognised, disaggregated by merchant and scheme, based upon the key system inputs. › Examining cash receipts from schemes and third-party confirmations. › Reviewing customer complaints data to assess whether any recognised revenue amount is in dispute.

Assessing whether the Group’s disclosures in respect of revenue recognition provide sufficient detail for users to understand the nature of transactions. Our results We found the revenue recognised in respect of acquiring revenue to be acceptable (2019: acceptable).

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Alternative Performance Measures Throughout the Annual Report and financial statements.

The risk Our response Presentation appropriateness Our procedures included: The Group has to comply with the ESMA Guidelines on Alternative Performance Measures: For each APM verifying Alternative Performance Measures (‘APMs’) that require that the requirements of the ESMA guidelines are met equal prominence, consistency, clear definitions, and through challenging management and critically assessing reconciliations to equivalent IFRS measures. An APM is disconfirming evidence (for example around these measures any financial measure that is not extracted directly from being balanced and presenting equally positive and negative the IFRS financial statements – for Network this includes results). We assessed that each APM was presented with a items such as Underlying EBITDA, Underlying Net Income, meaningful label, had a clear description and explanation Underlying EPS, and constant currency measures. In and no more prominence than the IFRS equivalents. addition, where certain items are excluded from an APM (for example Specially Disclosed Items), there are criteria Specially Disclosed Items (‘SDIs’): In assessing the that need to be met. appropriateness of adjustments to the IFRS equivalents, we assessed whether each SDI was exceptional by nature, There is a risk that the financial statement disclosures and incidence or size, was not a recurring item and clearly other disclosures to the market (including in the front-half described by management. narrative) do not comply with these requirements. Our results We found the presentation of the Alternative Performance Measures in the context of the Annual Report and financial statements to be acceptable (2019: acceptable).

Going concern Refer to note 2 (d) to the consolidated financial statements and page 124 of the Audit and Risk Committee Report.

The risk Our response Disclosure quality Considering whether these risks could plausibly affect the The financial statements explain how the Board has formed a liquidity or covenant compliance in the going concern period judgement that it is appropriate to adopt the going concern by assessing the Directors’ sensitivities over the level of basis of preparation for the Group and Parent Company. available financial resources and covenant thresholds indicated by the Group’s financial forecasts taking account That judgement is based on an evaluation of the inherent of severe, but plausible, adverse effects that could arise from risks to the Group’s and Company’s business model and how these risks individually and collectively. those risks might affect the Group’s and Company’s financial resources or ability to continue operations over a period to Our procedures also included: the end of June 2022. Historical comparisons: considering the historical accuracy of The risks most likely to adversely affect the Group’s and the Group’s cash flow forecasts and growth rates by assessing Company’s available financial resources and/or metrics the accuracy of previous forecasts to actuals. relevant to debt covenants over this period were: Sensitivity analysis: considering sensitivities over the level of › The impact of COVID-19 restrictions affecting the Group’s available financial resources indicated by the Group’s financial performance; forecasts taking account of plausible (but not unrealistic) › Reduced consumer confidence leading to slowdown in adverse effects that could arise from these risks individually and collectively. card spends. Our sector experience: assessing and challenging the key There are also less predictable but realistic second order assumptions in the forecasts used by the Directors by impacts, such as the risks of technical and operational benchmarking these against external forecasts and our interruptions which impact the Group’s ability to execute sector knowledge. its strategy in the near to medium term. Assessing transparency: The risk for our audit was whether or not those risks were › considering whether the going concern disclosure in note 2 (d) such that they amounted to a material uncertainty that may to the financial statements gives a full and accurate description have cast significant doubt about the ability to continue as of the Directors’ assessment of going concern. a going concern. Had they been such, then that fact would have been required to have been disclosed. Our results We found the going concern disclosure in note 2 (d) without any material uncertainty to be acceptable (2019: acceptable).

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Independent Auditor’s Report to the Members of Network International Holdings Plc continued

Recoverability of Parent Company’s investment in subsidiaries (USD 1,553 million) Refer to page 221 (accounting policy) and page 224 (financial disclosures).

The risk Our response Low risk, high value Our procedures included: The carrying amount of the Parent Company’s investments Tests of details: Comparing the carrying amount of 100% of in subsidiaries represents 100% of the Company’s total investments with the relevant subsidiaries’ draft balance sheet assets. Their recoverability is not at a high risk of significant to identify whether their net assets, being an approximation misstatement or subject to significant judgement. However, of their minimum recoverable amount, were in excess of their due to their materiality in the context of the Parent Company carrying amount and assessing whether those subsidiaries financial statements, this is considered to be the area that have historically been profit-making. had the greatest effect on our overall Parent Company audit. Comparing valuations: For the investments where the carrying amount exceeded the net asset value, comparing the carrying amount of the investment with the expected value of the business based on a suitable multiple of the subsidiaries’ profit. Comparing the carrying value of the investments to the market capitalisation of the Group. Our results We found the Group’s assessment of the recoverability of the investment in subsidiaries to be acceptable (2019: acceptable).

3. Our application of materiality and an overview of the scope of our audit Materiality Materiality for the Group financial statements as a whole was set at USD 3.0m (2019: USD 4.0m), determined with reference to a benchmark of Group profit before tax, normalised to exclude reorganisation, restructuring and settlement, share-based compensation, and M&A and IPO related costs, and normalised by averaging over the last three years due to fluctuations in the business environment, as disclosed in note 4, of USD 64.3m (2019: normalised Group profit before tax of 92.4m), of which it represents 4.7%(2019: 4.3% of 2019 normalised Group profit before tax).

Materiality for the Parent Company financial statements as a whole was set at USD 1.5m (2019: USD 3.4m), determined with reference to Company total assets (2019: total assets), of which it represents 0.1% (2019: 0.2%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold, performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the financial statements as a whole.

Performance materiality was set at 75% (2019: 75%) of materiality for the financial statements as a whole, which equates to USD 2.25m (2019: USD 3.0m) for the Group and USD 1.13m (2019: USD 2.55m) for the Parent Company. We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.

We agreed to report to the Audit and Risk Committee any corrected or uncorrected identified misstatements exceeding USD 0.15m (2019: USD 0.2m), in addition to other identified misstatements that warranted reporting on qualitative grounds.

Scope Of the Group’s 16 (2019: 16) reporting components, we subjected 7 (2019: 5) to full scope audits for Group purposes. The components within the scope of our work accounted for the following percentages of the Group’s results:

Group Group profit Group revenue before tax total assets Audits for Group reporting purposes 97.6% 93.4% 96.6%

The remaining 2.4% (2019: 9.4%) of total Group revenue, 6.6% (2019: 12.0%) of total Group profit before tax and 3.4% (2019: 7.4%) of total Group assets is represented by 9 (2019: 11) reporting components, none of which individually represented more than 4% (2019: 6%) of any of the total Group revenue, Group profit before tax or total Group assets. For these residual components, we performed an analysis at an aggregated Group level to re-examine our assessment that there were no significant risks of material misstatement within these.

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The Group audit team instructed component auditors as to the significant areas to be covered, including the relevant risks detailed above and the information to be reported back. The Group audit team approved the component materiality, which ranged from USD 0.75m to USD 2.55m (2019: USD 1.2m to USD 3.4m), having regard to the mix of size and risk profile of the Group across the components. The work on 6 (2019: 4) of the Group’s 7 (2019: 5) components was performed by component auditors and the audit of the Parent Company was performed by the Group audit team. For those items excluded from normalised Group profit before tax, the component teams performed procedures on items relating to their components. The Group team performed procedures on the remaining excluded items.

On account of the travel restrictions in place during the performance of the audit, the Group team has not visited any component auditor and instead held virtual conference meetings with all component auditors (2019: the Group audit team visited 2 component locations in UAE and Jordan). At these meetings the Group team discussed the audit strategy, the ongoing audit efforts and focus areas, and the findings reported to the Group audit team were discussed in more detail. Any further work required by the Group team was then performed by the component auditor.

4. Going concern The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the Company or to cease their operations, and as they have concluded that the Group’s and the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for a period up to the end of June 2022 (‘the going concern period’).

An explanation of how we evaluated management’s assessment of going concern is set out in the related key audit matter in section 2 of this report.

Our conclusions based on this work:

› we consider that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate; › we have not identified, and concur with the Directors’ assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Group’s or Company’s ability to continue as a going concern for the going concern period; › we have nothing material to add or draw attention to in relation to the Directors’ statement in note 2 (d) to the financial statements on the use of the going concern basis of accounting with no material uncertainties that may cast significant doubt over the Group and Company’s use of that basis for the going concern period; and › the related statement under the Listing Rules set out on page 175 is materially consistent with the financial statements and our audit knowledge.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the Company will continue in operation.

5. Fraud and breaches of laws and regulations – ability to detect Identifying and responding to risks of material misstatement due to fraud To identify risks of material misstatement due to fraud (‘fraud risks’) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

› Enquiring of Directors, the Audit and Risk Committee, internal audit and inspection of policy documentation as to the Group’s high-level policies and procedures to prevent and detect fraud , including the internal audit function, and the Group’s channel for ‘whistleblowing’, as well as whether they have knowledge of any actual, suspected or alleged fraud. › Reading Board and Audit and Risk Committee minutes. › Considering remuneration incentive schemes and performance targets for Directors. › Using analytical procedures to identify any usual or unexpected relationships.

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit. This included communication from the Group to full scope component audit teams of relevant fraud risks identified at the Group level and request to full scope component audit teams to report to the Group audit team any instances of fraud that could give rise to a material misstatement at Group level.

As required by auditing standards, we perform procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition, in particular the risk that the Issuer Solutions revenue is recorded in the incorrect period and the risk that Group and component management may be in a position to make inappropriate accounting entries.

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We also identified a fraud risk related to Annual Report disclosures not being in line with ESMA Guidelines on Alternative Performance Measures (‘APMs’), in response to possible pressures to meet profit targets.

Further detail in respect of Annual Report disclosures is set out in the key audit matter disclosures in section 2 of this report.

We performed procedures including:

› Identifying journal entries and other adjustments to test for all full scope components based on risk criteria and comparing the identified entries to supporting documentation. These included those posted by senior finance management, those posted and approved by the same user, and those posted to unusual accounts. › Performing controls and substantive testing at full scope components with Issuer Solutions revenue to verify that these have been recorded in the correct period.

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the Directors and other management (as required by auditing standards), and discussed with the Directors and other management the policies and procedures regarding compliance with laws and regulations.

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. This included communication from the Group to full-scope component audit teams of relevant laws and regulations identified at the Group level, and a request for full scope component auditors to report to the Group team any instances of non-compliance with laws and regulations that could give rise to a material misstatement at Group level.

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), distributable profits legislation, and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: anti-bribery, and certain aspects of company legislation recognising the financial and regulated nature of the Group’s activities and its legal form. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Directors and other management and inspection of regulatory and legal correspondence, if any.

Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of law or regulation Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

6. We have nothing to report on the other information in the Annual Report The Directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly,we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 165

Strategic Report and Directors’ Report Based solely on our work on the other information:

› we have not identified material misstatements in the Strategic Report and the Directors’ Report; › in our opinion the information given in those reports for the financial year is consistent with the financial statements; and › in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Directors’ Remuneration Report In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

Disclosures of emerging and principal risks and longer-term viability We are required to perform procedures to identify whether there is a material inconsistency between the Directors’ disclosures in respect of emerging and principal risks and the Viability Statement, and the financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or draw attention to in relation to:

› the Directors’ confirmation within the Viability Statement on page 155 that they have carried out a robust assessment of the emerging and principal risks facing the Group, including those that would threaten its business model, future performance, solvency and liquidity; › the Principal Risks and Uncertainties disclosures describing these risks and how emerging risks are identified, and explaining how they are being managed and mitigated; and › the Directors’ explanation in the Viability Statement of how they have assessed the prospects of the Group, over what period they have done so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

We are also required to review the Viability Statement, set out on page 155, under the Listing Rules. Based on the above procedures, we have concluded that the above disclosures are materially consistent with the financial statements and our audit knowledge.

Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.

7. We have nothing to report on the other matters on which we are required to report by exception Under the Companies Act 2006, we are required to report to you if, in our opinion:

› adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or › the Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or › certain disclosures of Directors’ remuneration specified by law are not made; or › we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

8. Respective responsibilities Directors’ responsibilities As explained more fully in their statement set out on page 153, the Directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

Network International Holdings Plc Annual Report and Accounts 2020 166

Independent Auditor’s Report to the Members of Network International Holdings Plc continued

Auditor’s responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

9. The purpose of our audit work and to whom we owe our responsibilities This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and the terms of our engagement by the Company. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and the further matters we are required to state to them in accordance with the terms agreed with the Company, and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Michael Harper (Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants 15 Canada Square London, E14 5GL

7 March 2021

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 167

Consolidated Statement of Financial Position as at 31 December

2020 2019* Notes USD’000 USD’000 Assets Non-current assets Goodwill 8 262,609 262,561 Intangible assets 8 188,523 186,499 Property and equipment 7 50,285 57,400 Investment in associate 9 59,808 54,432 Investment securities 246 246 Long-term receivables 2,617 2,533 Total non-current assets 564,088 563,671

Current assets Scheme debtors 10 165,436 185,268 Receivables and prepayments 11 67,874 88,496 Restricted cash 10, 12 52,550 54,029 Cash and cash equivalents 12 398,781 45,473 Total current assets 684,641 373,266 Total assets 1,248,729 936,937

Liabilities Non-current liabilities Borrowings 15 369,025 211,783 Other long-term liabilities 17 21,584 24,379 Deferred tax liabilities 24.2 1,837 1,788 Total non-current liabilities 392,446 237,950

Current liabilities Merchant creditors 10 165,142 167,167 Trade and other payables 14 127,732 127,453 Borrowings 15 65,447 165,661 Total current liabilities 358,321 460,281

Shareholders’ equity Share capital 18 71,557 65,100 Share premium 18 252,279 – Foreign exchange reserve 18 (19,438) (20,115) Reorganisation reserve 18 (1,552,365) (1,552,365) Other reserves 18 4,773 5,851 Retained earnings 1,741,609 1,742,096 Equity attributable to equity holders 498,415 240,567

Non-controlling interest (453) (1,861) Total shareholders’ equity 497,962 238,706

Total liabilities and shareholders’ equity 1,248,729 936,937

The notes on pages 174 to 218 form part of these consolidated financial statements. These consolidated financial statements were approved and authorised for issue by the Board of Directors on 7 March 2021 and signed on its behalf by:

Nandan Mer Director and Chief Executive Officer

Network International Holdings Plc Annual Report and Accounts 2020 168

Consolidated Statement of Profit or Loss for the year ended 31 December

2020 2019* Notes USD’000 USD’000 Continuing operations Revenue 19 284,844 335,379

Personnel expenses 20 (96,933) (96,744) Selling, operating and other expenses 21 (103,174) (106,424) Depreciation and amortisation 7, 8 (51,537) (46,817) Share of profit of associate 9 5,820 5,299

Profit before interest and tax 39,020 90,693

Net interest expense 22 (21,669) (24,844) Write-off of unamortised debt issuance cost 15 (6,721) – Unrealised foreign exchange losses (328) (1,894)

Profit before tax 10,302 63,955 Taxes 24 (4,704) (6,638)

Profit from continuing operations 5,598 57,317

Discontinued operations Loss from discontinued operations, net of taxes 16 – (359)

Profit for the year 5,598 56,958

Attributable to: Equity holders of the Group 6,155 57,604 Non-controlling interest (557) (646)

Profit for the year 5,598 56,958

Earnings per share (basic and diluted) in USD cents 23 1.2 11.5 Earnings per share – Continuing operations (basic and diluted) in USD cents 23 1.2 11.6

The notes on pages 174 to 218 form part of these consolidated financial statements.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 169

Consolidated Statement of Other Comprehensive Income as at 31 December

2020 2019 USD’000 USD’000 Profit for the year 5,598 56,958

Other comprehensive income Items that may subsequently be reclassified to profit or loss Foreign currency translation difference on foreign operations 677 3,160

Items that will never be reclassified to profit or loss Re-measurement of defined benefit liability (1,365) (1,692)

Net change in other comprehensive income (688) 1,468

Total comprehensive income for the year 4,910 58,426

Attributable to: Equity holders of the Group 5,467 59,072 Non-controlling interest (557) (646)

Total comprehensive income 4,910 58,426

The notes on pages 174 to 218 form part of these consolidated financial statements.

Network International Holdings Plc Annual Report and Accounts 2020 170 Annual Report and Accounts 2020 Plc Holdings Network International

Consolidated Statement of Changes in Equity for the year ended 31 December

Foreign Equity Non- Total Share Share exchange Reorganisation Other Retained attributable to controlling shareholders’ capital premium reserve reserve reserves earnings equity holders interest equity USD’000 As at 1 January 2020 65,100 – (20,115) (1,552,365) 5,851 1,742,096 240,567 (1,861) 238,706

Total comprehensive income for the year Profit for the year – – – – – 6,155 6,155 (557) 5,598

Other comprehensive income for the year: Foreign currency translation differences – – 677 – – – 677 – 677 Re-measurement of defined benefit liability – – – – (1,365) – (1,365) – (1,365) Total other comprehensive income for the year 677 – (1,365) – (688) – (688) Total comprehensive income for the year – – 677 – (1,365) 6,155 5,467 (557) 4,910 Issuance of new shares 6,457 258,280 – – – – 264,737 – 264,737 Share issuance cost – (6,001) – – – – (6,001) – (6,001) Increase in statutory reverse – – – – 287 (287) – – – Purchase of treasury shares – – – – – (10,425) (10,425) – (10,425) Share-based payment – – – – – 4,070 4,070 – 4,070 Increase in shareholding of subsidiary with non-controlling interest – – – – – – – 1,965 1,965 As at 31 December 2020 71,557 252,279 (19,438) (1,552,365) 4,773 1,741,609 498,415 (453) 497,962

The notes on pages 174 to 218 form part of these consolidated financial statements. Strategic report Foreign Equity Non- Total Share Share exchange Reorganisation Other Retained attributable to controlling shareholders’ capital premium reserve reserve reserves earnings equity holders interest equity USD’000 As at 1 January 2019 1,559,796 6,184 (23,275) (1,552,365) 7,543 195,028 192,911 (1,215) 191,696

Total comprehensive income for the year Profit for the year – – – – – 57,604 57,604 (646) 56,958

Other comprehensive income for the year: Foreign currency translation differences – – 3,160 – – 3,160 – 3,160 Corporate governance Re-measurement of defined benefit liability – – – – (1,692) – (1,692) – (1,692) Total other comprehensive income for the year – – 3,160 – (1,692) – 1,468 – 1,468 Total comprehensive income for the year – – 3,160 – (1,692) 57,604 59,072 (646) 58,426 Capital reduction (1,494,696) (6,184) – – – 1,500,880 – – – Purchase of treasury shares – – – – – (12,821) (12,821) – (12,821) Share-based payment – – – – – 1,405 1,405 – 1,405 As at 31 December 2019 65,100 – (20,115) (1,552,365) 5,851 1,742,096 240,567 (1,861) 238,706

The notes on pages 174 to 218 form part of these consolidated financial statements. Financial statements Network International Holdings Plc Holdings Network International Annual Report and Accounts 2020 171 172

Consolidated Statement of Cash Flows for the year ended 31 December

2020 2019* Notes USD’000 USD’000 Operating activities Profit for the year from operations 5,598 56,958 Adjustments for: Depreciation and amortisation 7,8 51,537 46,817 Write-off of unamortised debt issuance cost 15 6,721 – Provision for expected credit losses 11 2,183 510 Net interest expense 22 21,669 24,844 Taxes 24 4,704 6,638 Foreign exchange losses and others 358 6,471 Loss on sale of assets – 17 Share of profits from associate (5,820) (5,299) Charge for share-based payment 17 4,070 1,405 Changes in long-term receivables and other liabilities 656 (4,986) Interest paid (16,985) (21,300) Taxes paid (6,058) (10,415) Changes in working capital before settlement related balances1 11 19,581 (9,625)

Net cash flows before settlement related balances 88,214 92,035

Changes in settlement related balances2 19,286 40,391

Net cash flows from operating activities 107,500 132,426

Investing activities Purchase of intangible assets and property and equipment 4.6 (50,064) (79,310) Dividends received from associate 9 – 2,723 Sale of intangible assets and property and equipment 585 – Interest received 441 1,093 Net cash flows from investing activities (49,038) (75,494)

* 2019 figures have been re-presented following the classification of Mercury Payments Services LLC (‘Mercury’, a subsidiary of the Group) from discontinued operations to continuing operations in 2020. 1 Changes in working capital before settlement related balances reflects movements in receivables and prepayments and trade and other payables adjusted for non-cash items. 2 Changes in settlement related balances reflects movements in scheme debtors, merchant creditors and restricted cash.

The notes on pages 174 to 218 form part of these consolidated financial statements.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 173

2020 2019* Notes USD’000 USD’000 Financing activities Proceeds from new borrowings 415,000 35,000 Repayment of borrowings (328,751) (44,918) Purchase of treasury shares (10,425) (12,821) Payment of debt issuance cost (6,676) (2,903) Payment of lease liabilities (4,620) (4,394) Issuance of subsidiary’s capital to non-controlling interest 1,965 – Proceeds from issuance of new shares 264,737 – Payment of share issuance expenses (6,001) –

Net cash flows from financing activities 325,229 (30,036)

Net increase in cash and cash equivalents 383,691 26,896 Cash as part of held for sale – 744 Effect of movements in exchange rates on cash held (169) 405

Cash and cash equivalents at the beginning of the year (14,422) (42,467)

Cash and cash equivalents at the end of the year (refer (i) below) 369,100 (14,422)

Note (i): Cash and cash equivalents – as per consolidated statement of financial position 12 398,781 45,473 Bank overdraft 15 (29,681) (59,895) 369,100 (14,422)

The notes on pages 174 to 218 form part of these consolidated financial statements.

Network International Holdings Plc Annual Report and Accounts 2020 174

Notes to the Consolidated Financial Statements

1. Legal status and activities Network International Holdings PLC (the ‘Company’) listed its shares on the London Stock Exchange on 12 April 2019. The principal activities of the Group are enabling payments acceptance at merchants, acquirer processing, switching financial transactions, hosting cards and processing payment transactions and providing end to end management services and digital payment services.

The registered office of the Company is situated in England and Wales.

The consolidated financial statements of the Group as at and for the year ended 31 December 2020 comprise the Company and its subsidiaries (together referred to as the ‘Group’) and the Group’s interest in associates.

A Group reorganisation was done in 2019 prior to its listing on the London Stock Exchange to facilitate the process. The result of the application of the capital reorganisation was to present the consolidated financial statements of 2019 as if the Company had always owned the Group. A Group Reorganisation Reserve was created as a separate component of equity, representing the difference between the share capital of the Company at the date of the Group reorganisation and that of the previous top organisation of the Group, Network International LLC.

The principal steps of the Group reorganisation were as follows:

› On 27 February 2019, the Company was incorporated by Network International LLC for 100 ordinary shares of GBP 1 each. › On 20 March 2019, Network International LLC transferred investment in Network International Holdings PLC to the shareholders. › On 29 March 2019, the existing share capital of the Company comprising 100 shares of GBP 1 each was split 10:1 into 1,000 shares of GBP 0.10 each. Subsequently, on the same day, the Company issued 1,396 new shares of GBP 0.10 each for GBP 139 / USD 180. This was followed by a share consolidation resulting in total share capital comprising 100 shares of GBP 2.396 / USD 3.119592 each. The net effect of this restructuring of capital was to increase the nominal value per share to GBP 2.396 / USD 3.119592 for 100 shares outstanding. › On 29 March 2019, the Company issued 499,999,900 shares to existing shareholders (254,999,949 to Emirates NBD PJSC and 244,999,951 to WP / GA) of par value GBP 2.396 / USD 3.119592 per share in exchange for acquiring the shares of the subsidiary (Network International Holding 1 Limited) and the shareholder’s receivables from Network International Holding 1 Limited. This resulted in the creation of share capital of USD 1,559,795,688 and share premium of USD 6,183,530 (being the difference between the carrying value of the shareholder’s receivable of USD 13,614,704 and the corresponding nominal value of shares issued of USD 7,431,174). › On 1 April 2019, the Company undertook a capital reduction by reducing the nominal value of its shares in issue from GBP 2.396 / USD 3.119592 to GBP 0.1000 per share / USD 0.1302 and cancellation of share premium created above.

The capital reduction resulted in the creation of distributable reserves of USD 1,507,767,530. The difference in the GBP/USD foreign exchange rate between the date of share issuance and capital reduction resulted in the creation of a foreign exchange difference of USD 6,888,000, which would be considered as a realised loss and hence, has been netted off against the Company’s retained earnings on the consolidated statement of financial position.

During the year, the Group has increased its share capital. For details, please refer to note 18 of these consolidated financial statements.

2. Basis of preparation (a) Statement of compliance These Group financial statements were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.

These Group financial statements were also prepared in accordance with International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’). Included within these consolidated financial statements are alternative performance measures (‘APM’) which are disclosed in note 4.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 175

(b) Basis of measurement The consolidated financial statements have been prepared under the historical cost basis except for the liability for defined benefit obligation, which is recognised at the present value of the defined benefit obligation, and financial assets at fair value through profit or loss, which are measured at fair value.

(c) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The Company’s functional currency is GBP.

The presentation currency of the Group is United States Dollar (‘USD’) as this is a more globally recognised currency and moreover two of the Group’s largest entities’ functional currencies (United Arab Emirates dirhams (‘AED’) for Network International LLC and Jordanian Dinar (‘JOD’) for Network International Services Limited Jordan) are pegged with USD. All financial information presented in USD has been rounded to the nearest thousands, except when otherwise indicated.

(d) Going concern The Directors have adopted the going concern basis in preparing these consolidated financial statements after assessing the principal risks and having considered the impact of COVID-19 on the Group financial performance including under a base case and a severe but plausible downside scenario. The COVID-19 pandemic has significantly impacted the performance of the Group throughout the period, and is discussed in detail in the ‘COVID-19 response’.

In making this assessment, the Directors have considered a forecast period of more than 12 months (until June 2022), estimating key performance indicators including revenues, underlying EBITDA, underlying and reported net income, capital expenditure and liquidity position of the Group based upon the known and expected impacts of COVID-19 as of now. The base forecast has been done based on the budget for 2021 approved by the Board. The base forecast excludes the impact of the acquisition of DPO and the proceeds of the equity raise to fund the acquisition.

The forecast has been done based on assumptions related to key variables including but not limited to Transaction Processing Volumes (‘TPV’), number of cards hosted and transactions processed, which are the key drivers of the Group revenues and cash flows. Both business lines of Merchant Solutions and Issuer Solutions have been impacted differently by the COVID-19 crisis. In Merchant Solutions, the Group’s revenues are generated through fees dependent upon the value of transactions processed (‘TPV’), as well as through value added services, and overall are very closely correlated to the underlying value of transactions taking place, and hence, significantly impacted by the COVID-19 pandemic. In Issuer Solutions, the Group’s customers are typically financial institutions, where we have multi-year contracts in place and a number of them have contractual minimums. Therefore our revenues for this business line are somewhat correlated to underlying transaction volumes, but have a greater resilience due to the card hosting and contractually fixed elements.

During the period, the Group has refinanced the syndicated term lending facility. The loan placement was considerably over subscribed by banks with both global and regional presence. The Group has additional committed revolving credit lines in place. The Group continues to have significant liquidity headroom to meet its financial obligations, as described in the ‘Chief Financial Officer’s Review’ section in the Strategic Report. The Group’s leverage ratio also remains below the maximum threshold prescribed under the financing facility agreement in the base case scenario as well as under severe but plausible downside scenario as described below.

The base forecast has been further stress tested by using a severe but plausible downside scenario, to assess the Group’s resilience against the possible adverse effect of the continued impact of the COVID-19 pandemic on the economy. In the stress scenario, the Directors assumed slower economic recovery as compared to the base case forecast and assumed that recovery of financial performance to the level of 2019 could be delayed until mid-2022. The Group forecasted revenues for 2021 and 2022 under stress scenario assumptions are lower than they would have been prior to onset of the COVID-19 pandemic (2019 revenues: USD 335.4 million).

The costs do not go down in the same proportion as the decrease in revenues as a significant proportion of the Group’s cost base is fixed in nature. This also impacts the headroom available in the Group’s leverage ratio. However, with forecast operating cash flow generation and available and committed financing facilities as explained above, the leverage ratio remains below the threshold in the downside scenario.

Furthermore, the Directors further assessed and concluded that the proposed acquisition of DPO Group does not materially impact the headroom available in the Group’s leverage ratio under the base case and the severe but plausible downside scenario.

Having considered the above factors, the Directors have a reasonable expectation that the Group has adequate resources to remain in operation for at least 12 months from the approval of these consolidated financial statements and therefore continue to adopt the going concern basis in preparing the consolidated financial statements.

Network International Holdings Plc Annual Report and Accounts 2020 176

Notes to the consolidated financial statements continued

2. Basis of preparation continued (e) New standards and interpretations New standards and interpretations that are effective.

The following amendments and interpretations apply for the first time in 2020, but do not have any significant impact on the consolidated financial statements.

› Amendments to IFRS 3: clarify the definition of business › Amendments to IFRS 7, 9 and IAS 39: addressing issues affecting financial reporting in the period leading up to IBOR reform › Amendments to IAS 1 and IAS 8: update the definition of material › Amendments to References to the Conceptual Framework in IFRS Standards: – Amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32 to update those pronouncements with regard to the revised Conceptual Framework.

(f) Accounting judgements and estimates The preparation of consolidated financial statements requires Directors to make judgements and estimates that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Critical accounting judgements Accounting judgements made by the Directors in the process of applying the Group’s accounting policies, that have the most significant effect on the amounts recognised in the consolidated financial statements, are as follows: i. Specially Disclosed Items The Directors have exercised their judgement to identify one-off items, either income or expense in nature, and has separately disclosed these items as Specially Disclosed Items (‘SDIs’) in the notes to the consolidated financial statements. The Directors consider the following key criteria when exercising their judgement to classify any items as SDI:

› Whether the item being considered is material and represents a one-off / exceptional event that needs to be disclosed separately as an SDI; and › Will it aid the user of the financial statements in understanding the activities taking place across the Group by enhancing the comparability of information between reporting periods.

The Directors classified these items under SDIs to compute underlying metrics (referred as alternative performance measures in the Annual Report and notes to the consolidated financial statements) to assess the Group’s underlying performance on a day-to-day basis, developing budgets and measuring performance against those budgets and in determining management remuneration. For further details on Specially Disclosed Items, please refer to note 4 of these consolidated financial statements.

Critical accounting estimates The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that could have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: i. Impairment review of goodwill and non-financial assets Impairment testing requires the Directors to assess whether the carrying value of assets or a cash generating unit (‘CGU’) can be supported by their recoverable amount (i.e. the greater of value in use or its fair value less costs to sell). An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 177

Goodwill The Group performs an impairment assessment at least on an annual basis, and more regularly if impairment indicators exist. This requires an estimation of the recoverable amount of the CGUs to which the goodwill is allocated.

The Group has identified Africa and Jordan as two separate CGUs of the Group. The key assumptions considered by the Group in identifying Africa and Jordan as CGUs included the following:

› The CGUs considered by the Group are the smallest units that include the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. › Africa and Jordan are the two separate units of the Group to which goodwill has been allocated.

The recoverable amount of an asset or CGU is based on its value in use which is calculated by estimating the future cash flows and discounting them to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset or CGU.

More details of the assumptions, recoverable amount and sensitivity analysis are provided in note 8.1 of these consolidated financial statements.

Non-critical judgements and estimates Following are the accounting judgements and estimates that have been exercised and applied in these consolidated financial statements, but do not have a significant effect on the amounts recognised in these consolidated financial statements. The brief description of these accounting judgements and estimates and the rationale of not considering these critical judgements and estimates is as follows: i. Held for sale classification The Directors classified Mercury Payments Services LLC (‘Mercury’, a subsidiary of the Group) operations as discontinued operations in 2018 and 2019 and considered this as a critical accounting judgement. As at 31 December 2020, management has reassessed its classification in line with IFRS 5 and classified it under continuing operations (for details, please refer to note 16 of these consolidated financial statements) and therefore believes that classification of Mercury is no longer a critical judgement area in preparing the consolidated financial statements. ii. Employee benefits Employee benefits were considered a significant estimate in 2019. During the year, the Directors have reassessed and concluded that the sensitivity of changing the relevant assumptions used in estimating the employee benefits obligations is not expected to cause a significant risk of material adjustments to the carrying amounts of assets and liabilities within the next financial year. Accordingly, the Directors have classified employee benefits as a non-critical estimate.

The Group’s net obligation in respect of defined benefit plans is calculated as the present value of the defined benefit obligation at the end of the reporting period. The present value of the net defined benefit pension obligation is dependent on a number of factors that are determined on an actuarial basis, using a number of assumptions. These assumptions include salary increments, discount rates, and retirement age and mortality rates. The Group’s employee benefits obligation as at 31 December 2020 amounted to USD 12.8 million (2019: USD 10.9 million) as disclosed in note 17.1 under other long-term liabilities.

The following are the principal actuarial assumptions at the reporting date:

31 December 2020 Discount rate p.a. 1.75% 14.5% until end-2020 going down by 0.5% each year Pre-retirement non-death/disability termination rate p.a. to an ultimate rate of 12.5% p.a. from 2024 onward Salary escalation rate p.a. 3.50% Involuntary termination rate p.a. Nil Retirement age 60

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Notes to the consolidated financial statements continued

2. Basis of preparation continued Non-critical judgements and estimates continued Sensitivity analysis Reasonable possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation as follows:

(+) 0.5 percentage (-) 0.5 percentage Discount rate p.a. 2.25% 1.25% + / (-) in defined benefit obligation (in USD’000) (402) 429

Salary escalation rate p.a. 4.00% 3.00% + / (-) in defined benefit obligation (in USD’000) 432 (410)

Voluntary exit rate Withdrawal rate 9.5% until Withdrawal rate 19.5% until + / (-) in defined benefit obligation (in USD’000) end-2020 going down by 0.5% end-2020 going down by 0.5% each year to an ultimate rate of each year to an ultimate rate of 7.5% p.a. from 2024 onward 17.5% p.a. from 2024 onward 831 (552) iii. Revenue recognition The Group has certain non-transaction based project related revenue. The management applied judgement in measuring the progress of the project through an internal process to recognise revenue based on the completion of the project. The project related revenue (where the Group applies its judgement in measuring the completion status of the project) is only 2% (2019: 3%) of the total Group’s revenue and hence the Directors do not consider this as a critical accounting judgement that has most significant effect in preparing these consolidated financial statement. iv. Impairment of loans and receivables The Group is following the Simplified approach under the IFRS 9 provisioning model for estimating the impairment of financial assets, under which the Group measures the loss allowance at an amount equal to full lifetime expected credit losses.

The Group applies a provision matrix which uses historical loss experience for each trade receivables segment and adjusts the historical loss rates for current conditions, and reasonable and supportable forecasts of future economic conditions. The Group has considered receivables outstanding for more than 180 days as default under IFRS 9. The expected credit loss recognised during the year amounted to USD 2.2 million (2019: USD 0.5 million).

Please refer to note 11 of these consolidated financial statements for the details of the provision made during the year.

The Directors have assessed the sensitivity of the various estimates used in computing the provision including considering changing probability of default (‘PD’) and macroeconomic factors used in the model and concluded that a reasonable possible change in assumptions would not have a material impact. v. Taxes The Group’s tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the Group’s total tax charge involves estimation and judgement in respect of certain matters particularly on recognising deferred tax assets and uncertain tax position. Judgement and estimation involved in deferred tax mainly relates to the carried forward tax losses, based on management’s assessment that it is probable that there will be sufficient and suitable taxable profits in the relevant legal entity against which these tax losses can be set off in the future. Judgement and estimation involved in current tax accruals relates to uncertain tax position until a conclusion is reached with the relevant tax authority or through a legal process.

In the Directors’ view, both the recognition of deferred taxes and corporate tax accruals is not considered a critical judgement or estimate for these consolidated financial statements and it does not have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 179

vi. Intangible assets and property and equipment – estimation of useful life Intangible assets (excluding goodwill) and property and equipment represents 15.1% (2019: 19.9%) and 4.0% (2019: 6.1%) of the Group’s total assets, respectively. Intangible assets and property and equipment are amortised / depreciated on a straight-line basis in the consolidated statement of profit or loss over their estimated useful lives (except for leased assets which are depreciated over the shorter of the lease term and their useful lives), from the date that they are available for use.

The useful life of these intangible assets and property and equipment depends on management’s estimate of the period over which economic benefit will be derived from the asset. Directors assess the useful lives for these assets when they are acquired, based on their prior experience with similar assets and after considering the impact of other relevant factors such as any expected changes in technology. In the Directors’ view, if any of these estimates related to useful life of intangible assets and property and equipment are revised during the year ending 31 December 2020, this is not expected to result in material adjustment to the carrying values of intangible assets. Hence estimates related to the useful life of the intangible assets and property and equipment are not considered critical for the purpose of the consolidated financial statements.

3. Accounting policies Except as described in note 2 (e), the Group has consistently applied the accounting policies to all periods presented in these consolidated financial statements.

During the year, the Group has reclassified unrealised foreign exchange losses amounting to USD 0.3 million (2019: USD 1.9 million) from selling, operating and other expenses to a separate line item in the consolidated statement of profit or loss, after profit before interest and tax. Accordingly, prior year figures have been reclassified. An unrealised foreign exchange loss arises due to the volatility in the Group’s foreign currency denominated assets and liabilities and is typically immaterial in amount. Therefore, the Group believes that presenting this as a separate line item after profit before interest and tax is more appropriate classification for the user of the consolidated financial statements.

Furthermore, the Group no longer classifies unrealised foreign exchange losses as Specially Disclosed Items (SDIs), as explained further in note 4.

The accounting policies below describe the basis of consolidation and foreign currencies accounting policies that relates to the consolidated financial statements as a whole. The other specific accounting policies are described in the note to which they relate.

(a) Basis of consolidation Business combinations The Group applies the acquisition method in accounting for business combinations. The consideration paid by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred or assumed and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred.

The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree’s financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.

Any goodwill that arises is tested annually for impairment. i. Subsidiaries Subsidiaries are the entities controlled by the Group. The Group controls an entity when it is exposed to, or has right to, variable returns from its involvement in the entity and has the ability to affect those returns through its powers over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. ii. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

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Notes to the consolidated financial statements continued

3. Accounting policies continued (a) Basis of consolidation continued iii. Non-controlling interests Non-controlling interest is that portion of equity in a subsidiary that is not attributable, directly or indirectly, to the Parent Company. Non-controlling interests are measured at their proportionate share of the subsidiaries’ identifiable net assets. They are presented as a separate item in the consolidated financial statements. iv. Loss of control On a loss of control, the Group de-recognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in the consolidated statement of profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, that retained interest is accounted for as an equity-accounted investee or in accordance with Group accounting policy for financial instruments depending on the level of influence retained.

(b) Foreign currencies i. Foreign currency transactions Transactions in foreign currencies are translated into the respective functional currency of Group entities at the spot exchange rates at the date of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the spot exchange rate at that date.

The foreign currency gain or loss on monetary items is the difference between the amortised cost in the functional currency at the beginning of the year, adjusted for effective profit and payments during the year, and the amortised cost in the foreign currency translated at the spot exchange rate at the end of the year.

Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the spot exchange rate at the date on which the fair value is determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the spot exchange rate at the date of the transaction. Foreign currency differences arising on translation are generally recognised in the consolidated statement of profit or loss, except for investment securities designated at fair value through other comprehensive income, where the exchange translation is recognised in the consolidated statement of other comprehensive income. ii. Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to USD at exchange rates at the reporting date. The income and expenses of foreign operations are translated to USD at exchange rates at the dates of the transactions or an appropriate average rate. Equity elements are translated at the date of the transaction and not retranslated in subsequent periods.

Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (‘foreign exchange reserve’) in equity. However, if the foreign operation is a non-wholly-owned subsidiary, then the relevant proportion of the translation difference is allocated to non-controlling interests.

When a foreign operation is disposed of entirely or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to the consolidated statement of profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in associate or joint venture that includes a foreign operation retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to the consolidated statement of profit or loss.

4. Alternative performance measures The Group uses these alternative performance measures to enhance the comparability of information between reporting periods by adjusting for uncontrollable or one-off items, to aid the user of the financial statements in understanding the activities taking place across the Group. In addition these alternative performance measures are used by the Group as key measures of assessing the Group’s underlying performance on day-to-day basis, developing budgets and measuring performance against those budgets and in determining management remuneration.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 181

4.1 Specially Disclosed Items Specially Disclosed Items (‘SDIs’) are items of income or expenses that have been recognised in a given period which management believes, due to their materiality and being one-off / exceptional in nature, should be disclosed separately, to give a more comparable view of the period-to-period underlying financial performance.

Certain items that were previously reported as SDIs have been reconsidered and the Directors are no longer reporting them as SDIs. These items are i) expenses relating to reorganisation, restructuring and settlement; ii) unrealised loss / (gain) from re-measurement of foreign currency denominated assets or liabilities; and iii) amortisation associated with the IT transformation programme.

The table below presents a breakdown of the Specially Disclosed Items for each of the years ended 31 December 2020 and 2019.

2019 2019 Previously 2020 2019 Reclassification4 reported USD’000 USD’000 USD’000 USD’000 Items affecting EBITDA Reorganisation, restructuring and settlements – – 2,132 2,132 Share-based compensation1 10,445 10,679 – 10,679 M&A and IPO related costs2 7,696 16,111 – 16,111 Other one-off items – – 1,894 1,894 Total SDIs affecting EBITDA 18,141 26,790 4,026 30,816

Items affecting net income Amortisation related to IT transformation – – 10,735 10,735 Amortisation of acquired intangibles3 4,204 4,202 – 4,202 Total SDIs affecting net income 4,204 4,202 10,735 14,937

Total SDIs 22,345 30,992 14,761 45,753

1 Includes charge for the year in relation to the Management Incentive Award Plan, IPO Cash Bonus, and Long Term Incentive Plan, all of which were specific one-off payments relating to the listing. 2 These are one–off expenses incurred in relation to proposed acquisition of DPO (2019: expenses related to the Initial Public Offering including fees paid to various advisors). 3 Amortisation charge on the intangible assets (acquired under business combination) recognised in the Group’s consolidated statement of financial position as part of the Group’s acquisition of Emerging Market Payments Services (‘EMP’) in 2016. 4 Specially Disclosed Items: below items are no longer classified as SDIs. a) Reorganisation, restructuring and settlements: these expenses are not material in the period, nor are they anticipated to be material in future periods. The Group no longer believes it is necessary to report such items separately, and they are therefore classified within underlying expenses. b) Unrealised foreign exchange (gains/losses): arise mainly in relation to FX volatility. As these are not material in the current or prior periods, and are expected to remain immaterial in future periods, the Group no longer believe it is necessary to report separately as an SDI. c) Amortisation related to IT transformation: The IT transformation was a historic one-off capital investment project that included the development of a new technology and card management platform, the Group’s proprietary payment gateway, and a significant upgrade to the switching system. Following completion of the project, and in response to shareholder feedback regarding the classification of this item, amortisation related to the IT transformation has now been classified within underlying depreciation and amortisation.

4.2 Underlying EBITDA Underlying EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation and amortisation, write-off of unamortised debt issuance cost, unrealised foreign exchange losses, share of depreciation of associate and Specially Disclosed Items affecting EBITDA. The table below presents a reconciliation of the Group’s reported profit from continuing operations to underlying EBITDA for each of the years ended 31 December 2020 and 2019.

2020 2019 USD’000 USD’000 Profit from continuing operations 5,598 57,317 Depreciation and amortisation 51,537 46,817 Write-off of unamortised debt issuance cost 6,721 – Net Interest expense 21,669 24,844 Unrealised foreign exchange losses 328 1,894 Taxes 4,704 6,638 Share of depreciation from associate 3,863 4,222 Specially Disclosed Items affecting EBITDA 18,141 26,790 Underlying EBITDA 112,561 168,522

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Notes to the consolidated financial statements continued

4. Alternative performance measures continued 4.3 Underlying EBITDA margin excluding share of associate Underlying EBITDA margin excluding share of associate represents the Group’s underlying EBITDA margin which is considered by the Group to give a more comparable view of period-to-period EBITDA margins.

The table below presents a computation of the Group’s underlying EBITDA margin, which is defined as underlying EBITDA before share of associate divided by the revenue.

2020 2019 USD’000 USD’000 Revenue 284,844 335,379

Underlying EBITDA 112,561 168,522 Share of EBITDA of associate (9,683) (9,521) Underlying EBITDA before share of associate 102,878 159,001 Underlying EBITDA margin excluding share of associate 36.1% 47.4%

4.4 Underlying net income Underlying net income represents the Group’s profit from continuing operations adjusted for write-off of unamortised debt issuance cost and specially disclosed items. Underlying net income is considered by the Group to give a more comparable view of period-to-period profitability.

The table below presents a reconciliation of the Group’s reported profit from continuing operations to underlying net income for each of the years ended 31 December 2020 and 2019.

2020 2019 USD’000 USD’000 Profit from continuing operations 5,598 57,317 Write-off of unamortised debt issuance cost 6,721 – Specially Disclosed Items affecting EBITDA (refer to note 4.1) 18,141 26,790 Specially Disclosed Items affecting net income (refer to note 4.1) 4,204 4,202 Underlying net income 34,664 88,309

4.5 Underlying earnings per share (‘EPS’) The Group’s underlying EPS is defined as the underlying net income (as explained above) divided by the weighted average numbers of ordinary shares at the end of the relevant financial year.

2020 2019 Underlying net income (USD’000) 34,664 88,309 Weighted average number of shares (’000) 520,833 500,000 Underlying EPS (USD cents) 6.7 17.7

4.6 Capital expenditure The table below provides the split of total capital expenditure into the IT transformation programme, growth and maintenance capital expenditure for 2020 and 2019. Growth and maintenance capital expenditure collectively are referred to as core capital expenditure (ex. IT transformation).

2020 2019 USD’000 USD’000 Total capital expenditure 46,470 84,265 Core capital expenditure 46,470 45,662 of which is maintenance capital expenditure 21,038 25,725 of which is growth capital expenditure 25,432 19,937 IT transformation capital expenditure – 38,603

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 183

Reconciliation of capital expenditure to the cash spend in the consolidated statement of cash flows 2020 2019 USD’000 USD’000 Total capital expenditure 46,470 84,265 Goods and services received in the current period, but yet to be paid Transformation capital expenditure – (7,296) Growth and maintenance capital expenditure (12,639) (12,959)

Goods and services received in the previous period, and paid in the current period Transformation capital expenditure 7,296 8,711 Growth and maintenance capital expenditure 8,937 6,589 Total consolidated capital expenditure spend (as per cash flows) 50,064 79,310

4.7 Underlying free cash flow Underlying free cash flow is calculated as underlying EBITDA adjusted for changes in working capital before settlement related balances, taxes paid, core capital expenditure, SDI affecting EBITDA and adjustment for share of EBITDA of associate, less dividend. The Group uses underlying free cash flow as an operating performance measure that helps management determine the conversion of underlying EBITDA to underlying free cash flow.

2020 2019 USD’000 USD’000 Underlying EBITDA 112,561 168,522 Changes in working capital before settlement related balances 19,581 (9,625) Taxes paid (6,058) (10,415) Core capital expenditure (46,470) (45,662) Specially Disclosed Items affecting EBITDA (18,141) (26,790) Adjustment for share of EBITDA of associate, less dividend (9,683) (6,798) Underlying free cash flow 51,790 69,232

4.8 Reconciliation of cash flows from operating activities to underlying free cash flow 2020 2019 USD’000 USD’000 Net cash inflows from operating activities 107,500 132,426

Less: Cash flows included in the statutory cash flows but not in the underlying free cash flow Changes in settlement related balances, long-term receivables and other liabilities (19,942) (35,405) Charge for share-based payment (4,070) (1,404) Add: Cash flows included in the statutory cash flows but not in the underlying free cash flow Dividends received from associate – 2,723 Interest paid 16,985 21,300 Others* (2,213) (4,746) Underlying free cash flow before capital expenditure 98,260 114,894 Core capital expenditure (46,470) (45,662) Underlying free cash flow 51,790 69,232

* Others include provision for expected credit losses, foreign exchange gains and losses, and loss from discontinued operations.

4.9 Underlying effective tax rate The Group’s underlying effective tax rate is defined as the underlying taxes as a percentage of the Group’s underlying net income before tax. The underlying effective tax rate for the Group for 2020 and 2019 was 11.9 % and 7.0%, respectively.

2020 2019 USD’000 USD’000 Underlying net income before tax 39,368 94,947 Taxes 4,704 6,638 Underlying effective tax rate 11.9% 7.0%

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Notes to the consolidated financial statements continued

5. Segment reporting IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker (Network Leadership Team) and the Board of Directors to allocate resources and assess performance. For each identified operating segment, the Group has disclosed information that is assessed internally to review and steer performance.

The Group manages its business operations on a geographic basis and reports two operating segments, i.e. i) Middle East and ii) Africa. The Group reviews and manages the performance of these segments based on total revenue and contribution for each operating segment. Contribution is defined as segment revenue less operating costs (personnel cost and selling, operating and other expenses) that can be directly attributed to or controlled by the segments. Contribution does not include allocation of shared costs that are managed at Group level and hence shown separately under central function costs.

31 December 2020 Non- Statement of profit or loss Middle East Africa attributable Total USD’000 Revenue 198,224 80,020 6,600* 284,844

Contribution 129,934 54,314 6,600 190,848 Contribution margin (%) 65.5% 67.9% – 67.0% Central functions costs – – (95,019) (95,019) Specially Disclosed Items affecting EBITDA – – (18,141) (18,141) Depreciation and amortisation – – (51,537) (51,537) Share of profit of associate – – 5,820 5,820 Net interest expense – – (21,669) (21,669) Taxes – – (4,704) (4,704) Profit from continuing operations 129,934 54,314 (178,650) 5,598

* USD 6.6 million (2019: Nil) relates to the revenue derived from solutions developed as part of the Mastercard strategic partnership.

Non- Statement of financial position Middle East Africa attributable Total USD’000 Current assets 187,697 23,613 473,331 684,641 Non-current assets 33,387 3,142 527,559 564,088 Total assets 221,084 26,755 1,000,890 1,248,729

Current liabilities 193,454 5,632 159,235 358,321 Non-current liabilities 12,996 – 379,450 392,446 Total liabilities 206,450 5,632 538,685 750,767

31 December 2019 Non- Statement of profit or loss Middle East Africa attributable Total USD’000 Revenue 244,833 90,546 – 335,379

Contribution 178,429 63,964 – 242,393 Contribution margin (%) 72.9% 70.6% – 72.3% Central functions costs – – (85,286) (85,286) Specially Disclosed Items affecting EBITDA – – (26,790) (26,790) Depreciation and amortisation – – (46,817) (46,817) Share of profit of associate – – 5,299 5,299 Net interest expense – – (24,844) (24,844) Taxes – – (6,638) (6,638) Profit from continuing operations 178,429 63,964 (185,076) 57,317

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 185

Non- Statement of financial position Middle East Africa attributable Total USD’000 Current assets 227,521 28,975 116,770 373,266 Non-current assets 42,321 2,108 519,242 563,671 Total assets 269,842 31,083 636,012 936,937

Current liabilities 205,167 10,357 244,757 460,281 Non-current liabilities 11,722 – 226,228 237,950 Total liabilities 216,889 10,357 470,985 698,231

Middle East The Group’s primary market in the Middle East region is UAE whereas the second most significant market is Jordan. In both the markets, the Group provides Merchant Acquiring, Acquirer Processing and Issuer Solutions services to various financial and non-financial institutional clients.

Africa Under the Africa region, the Group’s key sub-markets are North Africa, sub-Saharan Africa and Southern Africa.

(i) North Africa One of the most significant markets in North Africa is Egypt. The Group currently provide services to several of Egypt’s leading financial institutions, for both their Merchant Acquiring and Issuer Solution needs. North Africa contributed 47% of the total Africa revenue in 2020 (2019: 47%).

(ii) Sub-Saharan Africa One of the most significant markets in sub-Saharan Africa is Nigeria where the Group has an established presence serving several of Nigeria’s leading financial institutions, mainly providing Issuer Processing services. Sub-Saharan Africa contributed 36% of the total Africa revenue in 2020 (2019: 32%).

(iii) Southern Africa The significant market in Southern Africa is South Africa, where the Group provides retail processing services. South Africa contributed 17% of the total Africa revenue in 2020 (2019: 21%).

Major customer The Group’s major customer is Emirates NBD PJSC and its subsidiaries whose revenue accounts for approximately 21.4% (2019: 18.1%) of the total Group revenue (refer to note 13).

All of the revenue of Emirates NBD PJSC comes from Issuer Solutions and is included under the Middle East segment.

Please refer to note 19 for the split of revenues by business lines (i.e. Merchant and Issuer Solutions).

6. Business combination and disposals 6.1 Network International Investment Pte. Ltd. On 29 October 2012, the Group through its subsidiary Network International Investment Pte. Ltd., (‘NIIPL’) entered into an agreement to purchase 75% shareholding of TimesOfMoney Private Limited (‘ToM’) for a consideration of USD 49.2 million. For the remaining 25%, the Group entered into a call-put option agreement with the buyer, which the Group had exercised in 2015 and acquired the remaining stake at a consideration of USD 21.7 million. The stake was acquired in 2016.

The Group disposed of ToM in various stages and the last part of the business (software business division) was disposed of in November 2018.

There has been no acquisition or disposal during the year.

6.2 Mercury Payments Services LLC (Mercury) On 13 November 2016, the Group entered into an agreement with First Abu Dhabi Bank (previously known as National Bank of Abu Dhabi PJSC (‘NBAD’)) to form a limited liability company, Mercury Payments Services LLC. Mercury operates the ‘Mercury’ payment scheme in UAE which is a domestic payment card network that permits members to issue cards on network and to acquire transactions on such network and offers other Value Added Services.

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Notes to the consolidated financial statements continued

6. Business combination and disposals continued 6.2 Mercury Payments Services LLC (‘Mercury’) continued During 2018 and 2019, the Group classified Mercury as discontinued operations and after reassessment classified it in continuing operation as at 31 December 2020 in line with the guidance of IFRS 5. Please refer to note 16 for details on discontinued operations.

6.3 Network International Investment Holding Limited (previously known as Emerging Markets Payments Holding (Mauritius) Limited) On 1 March 2016, the Group entered into an agreement to purchase 100% shareholding of Network International Investment Holding Limited for a consideration of USD 255.8 million. The Group had recognised goodwill amounting to USD 260.1 million (refer to note 8 for details).

6.4 DPO Group (3G Direct Holdings Limited) On 28 July 2020, the Group entered into an agreement to acquire 100% stake in 3G Direct Pay Holdings Limited (‘DPO’ or ‘DPO Group’), the leading, high-growth online commerce platform in Africa, for a total consideration of approximately USD 288 million (the ‘Transaction’). The consideration will be funded through the proceeds from an equity placing representing 10.0% of the Company’s existing issued share capital, USD 50 million vendor consideration shares issued to Apis Growth Fund I, managed by Apis Partners (‘Apis’), and USD 13 million consideration shares issued to the DPO co-founders.

As of 31 December 2020, the transaction is subject to customary closing conditions including regulatory and anti-trust approvals. Accordingly, these consolidated financial statements have not consolidated the DPO financial statements.

7. Property and equipment Recognition and measurement Items of property and equipment are measured at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct employee cost, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

Subsequent costs The cost of replacing part of an item of property or equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property and equipment are recognised in the consolidated statement of profit or loss as incurred.

Depreciation Depreciation is recognised in the consolidated statement of profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated.

The estimated useful lives are as follows: Years Leasehold improvements 3 – 10 Furniture and fixtures 3 – 10 Office equipment 3 – 5 Building 20 – 50 Computer hardware 3 – 10

Depreciation methods, useful lives and residual values are reassessed at the reporting date. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. The differences are included in the consolidated statement of profit or loss.

Capital work in progress (‘CWIP’) Capital work in progress for property and equipment and intangible assets represent spends related to the assets that are under development and are classified as such until the completion of the development work and are ready for use. Once put to use, these assets are amortised in line with the applicable Group accounting policy.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 187

Leasehold improvement, Computer Capital work Land and Right of furniture and and office In progress building use asset fixtures equipment (‘CWIP’) Total 2020 USD’000 Cost Balance as at 1 January 2020 5,729 17,410 5,846 142,795 6,167 177,947 Additions – – 347 2,307 8,002 10,656 Disposals (72) – (206) (2,319) – (2,597) Transfers from CWIP – – 7 7,853 (7,860) – Transfers from intangibles – – – 324 – 324 Transfers to intangibles – – – – (528) (528) Right of use asset additions during the year – 1,227 – – – 1,227 Derecognition of right of use assets – (984) – – – (984) Effects of change in foreign exchange 144 37 30 (451) (32) (272)

As at 31 December 2020 5,801 17,690 6,024 150,509 5,749 185,773

Accumulated depreciation and impairment Balance at 1 January 2020 741 4,949 4,155 107,434 3,268 120,547 Charge for the year 157 – 668 14,648 – 15,473 Disposals (72) – (201) (2,239) – (2,512) Depreciation on right of use asset – 2,400 – – – 2,400 Effects of change in foreign exchange 25 (89) – (356) – (420)

Balance as at 31 December 2020 851 7,260 4,622 119,487 3,268 135,488

Carrying value 4,950 10,430 1,402 31,022 2,481 50,285

2019 Cost Balance as at 1 January 2019 5,729 9,917 4,169 127,086 12,962 159,863 Additions – – 1,519 6,587 7,614 15,720 Disposals – – (23) (2,701) – (2,724) Transfers from CWIP – – 112 11,873 (11,985) – Transfers to intangibles – – – – (1,319) (1,319) Transfers from intangibles – – 45 – – 45 Right of use asset additions during the year – 6,563 – – – 6,563 Effects of change in foreign exchange – 930 24 (50) (1,105) (201)

As at 31 December 2019 5,729 17,410 5,846 142,795 6,167 177,947

Accumulated depreciation and impairment Balance at 1 January 2019 684 1,858 3,559 96,005 3,268 105,374 Charge for the year 57 – 582 14,779 – 15,418 Disposals – – (17) (2,690) – (2,707) Depreciation on right of use asset – 3,004 – – – 3,004 Effects of change in foreign exchange – 87 31 (660) – (542)

Balance as at 31 December 2019 741 4,949 4,155 107,434 3,268 120,547

Carrying value 4,988 12,461 1,691 35,361 2,899 57,400

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Notes to the consolidated financial statements continued

8. Intangible assets and goodwill Goodwill Goodwill arises on the acquisition of subsidiaries. Goodwill represents the excess of cost of an acquisition over the fair value of the Group’s share of the net identifiable assets. It is carried at cost less accumulated impairment losses and is tested annually for impairment.

Acquired intangibles At the date of acquisition of a subsidiary or associate, intangible assets that are deemed separable and that arise from contractual or other legal rights are capitalised and included within the net identifiable assets acquired. These intangible assets are initially measured at fair value, which reflects market expectations of the probability that the future economic benefits embodied in the asset will flow to the Group, and are amortised on the basis of their expected useful lives. At each reporting date, these assets are assessed for indicators of impairment. In the event that an asset’s carrying amount is determined to be greater than its recoverable amount, the asset is written down immediately.

The estimated useful lives are as follows:

Years Customer relationships 6 – 7 Brands Indefinite

Other intangible assets Except for goodwill and acquired intangible assets, all other intangible assets are amortised on a straight-line basis in the consolidated statement of profit or loss over their estimated useful lives, from the date that they are available for use.

The estimated useful lives are as follows:

Years Computer software 4 – 10

Computer software acquired by the Group is stated at cost less accumulated amortisation and accumulated impairment loss (if any).

Subsequent expenditure on software is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred. Amortisation is recognised in the consolidated statement of profit or loss on a straight-line basis over the estimated useful life of the software, from the date that it is available for use.

Research and development costs Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the consolidated statement of profit or loss as incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, staff salaries, overhead costs that are directly attributable to preparing the asset for its intended use, and capitalised borrowing costs. Other development expenditure is recognised in the consolidated statement of profit or loss as incurred. Capitalised development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 189

Capital work in progress (‘CWIP’) Please refer to note 7 for the CWIP Group accounting policy.

Computer Customer 2020 Goodwill software contracts Brands CWIP Total USD’000 Cost Balance as at 1 January 2020 262,561 233,284 32,397 2,780 56,998 588,020 Additions – 1,887 – – 33,927 35,814 Disposal/Utilisation – (718) – – (357) (1,075) Transfers from CWIP – 34,428 – – (34,428) – Transfers from property and equipment – – – – 528 528 Transfers to property and equipment – (30) – – (294) (324) Effects of change in foreign exchange 48 (206) – – 70 (88)

As at 31 December 2020 262,609 268,645 32,397 2,780 56,444 622,875

Amortisation and impairment Balance at 1 January 2020 – 81,022 19,086 – 38,852 138,960 Charge for the year – 29,460 4,204 – – 33,664 Disposal/Utilisation – (576) – – – (576) Effects of change in foreign exchange – (305) – – – (305)

Balance as at 31 December 2020 – 109,601 23,290 – 38,852 171,743 Carrying value 262,609 159,044 9,107 2,780 17,592 451,132

Computer Customer 2019 Goodwill software contracts Brands CWIP Total USD’000 Cost Balance as at 1 January 2019 262,307 162,313 32,397 3,214 59,773 520,004 Additions – 6,125 – – 62,420 68,545 Disposal/Utilisation – (284) – (434) – (718) Transfers from CWIP – 63,497 – – (63,497) – Transfers from property and equipment – 1,319 – – – 1,319 Transfers to property and equipment – – – – (45) (45) Effects of change in foreign exchange 254 314 – – (1,653) (1,085)

As at 31 December 2019 262,561 233,284 32,397 2,780 56,998 588,020

Amortisation and impairment Balance at 1 January 2019 – 56,935 14,777 433 38,852 110,997 Charge for the year – 24,086 4,309 – – 28,395 Disposal/Utilisation – (285) – (433) – (718) Effects of change in foreign exchange – 286 – – – 286 Balance as at 31 December 2019 – 81,022 19,086 – 38,852 138,960 Carrying value 262,561 152,262 13,311 2,780 18,146 449,060

Network International Holdings Plc Annual Report and Accounts 2020 190

Notes to the consolidated financial statements continued

8. Intangible assets and goodwill continued 8.1 Impairment testing The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (‘CGUs’). Goodwill arising out of business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to that asset or CGU.

Impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognised in the consolidated statement of profit or loss. They are first allocated to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amount of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.

Goodwill is not deductible for tax purposes.

During the year, impairment testing of goodwill was done based on CGU. For this purpose, management considered two CGUs based on their geographical location, namely Jordan and Africa business.

Jordan and Africa CGU The goodwill relates to cash generating units of Jordan and Africa arising mainly from the acquisition of Network International Investment Holding Limited (previously known as Emerging Markets Payments Holding (Mauritius) Limited and Network International Payment Services (S.A.E.)). The goodwill of Network International Investment Holding Limited is allocated to Jordan and Africa.

During the year, the impairment testing resulted in Nil impairment for Jordan and Africa CGUs (2019: Nil).

For 2020, the recoverable amount for Jordan (USD 209.1 million) and Africa (USD 549.1 million) has been calculated based on the CGUs’ value in use. The carrying value of Jordan and Africa amounted to USD 53.4 million and USD 387.7 million respectively. It was determined by discounting the future cash flows expected to be generated. The calculation of the value in use was based on the following key assumptions: a) Management has estimated the revenue growth, underlying EBITDA and level of working capital needed to support the business. The estimates are based on past experience and expectations of future changes in the market including the impact of the pandemic caused by COVID-19. b) Cash flows are projected based on past experience, actual operating results and future business plan for five years based on declining revenue growth rate. The forecast period is based on the Group’s long-term perspective with respect to the operation of each CGU. c) Discount rate used for Jordan and Africa business CGU was 12.1% and 14.8% respectively. d) In determining the recoverable amounts for the CGUs the terminal growth rate is 3%.

The key assumptions described above may change as economic and market conditions change. The Group estimates that possible changes in these assumptions are not expected to cause the recoverable amount to decline below the carrying amount.

For 2019, the recoverable amount was calculated using the Group CGUs’ fair value less cost to sell. The fair values are based on 2020 forecast EBITDA and peer companies’ EBITDA multiples. The average EBITDA multiple used was ‘17.6’.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 191

Below is the goodwill allocated to different CGUs and the carrying value of intangible assets having indefinite life.

Indefinite life Goodwill intangible assets 2020 2019 2020 2019 USD’000 USD’000 USD’000 USD’000 Jordan 30,647 30,647 2,780 2,780 Africa 231,962 231,914 – – 262,609 262,561 2,780 2,780

Sensitivity analysis The Directors have done the sensitivity analysis by changing the underlying assumptions used to determine the recoverable amount of the two CGUs. The Directors noted that changing the discount rate (to 10% and 16%) and terminal growth rate (to 2.5% and 3.5%), individually and together, would not cause the carrying amount of the CGU to be higher than the recoverable amount.

9. Investment in associate The Group’s interest in equity-accounted investee comprises its interest in associate. Interest in an associate is accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equity-accounted investees, until the date on which significant influence or joint control ceases. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment.

Transguard Cash LLC Name and nature of investment Associate Ownership 50% Place of incorporation United Arab Emirates 2020 2019 USD’000 USD’000 As at 1 January 54,432 51,856 Share of profits 5,820 5,299 Dividends received – (2,723) Fair value reserve (re-measurement of defined benefit liability) (444) – As at 31 December 59,808 54,432

Cash and cash equivalents 24,043 8,228 Other current assets 22,057 23,672 Non-current assets 49,814 51,319 Current liabilities 17,409 15,969 Non-current liabilities 4,515 4,013 Net assets (100%) 73,990 63,237 Total revenue 91,556 100,948 Total expenses (79,915) (90,350) Net profit (100%) 11,641 10,598

10. Scheme debtors and merchant creditors Scheme debtors and merchant creditors represent intermediary balances that arise as part of the daily settlement process related to Network’s direct acquiring business and processing of transactions on behalf of Network’s issuer processing and acquirer processing clients in accordance with contractual arrangements.

2020 2019 USD’000 USD’000 Scheme debtors 165,436 185,268 Restricted cash 52,550 54,029 Merchant creditors (165,142) (167,167) Settlement balances on-hold* (51,688) (53,245) Other merchant creditors (113,454) (113,922) Settlement related working capital balances 52,844 72,130

* Represents the off-set balance to restricted cash.

Network International Holdings Plc Annual Report and Accounts 2020 192

Notes to the consolidated financial statements continued

10. Scheme debtors and merchant creditors continued Scheme debtors Scheme debtors consist primarily of the Group’s receivables from the issuer banks, card schemes for transactions processed for merchants, and settlement related receivables from issuer processing clients for amounts settled to card schemes on their behalf.

Merchant creditors Merchant creditors consist primarily of the Group’s liability to merchants for transactions that have been processed but not yet settled including any deferred settlements or amounts withheld to cover chargeback risks. This also includes balances received from card schemes to be settled to acquirer processing clients.

The Group has limited ability to influence the working capital related to scheme debtors and merchant creditors (which is referred to as settlement related balances) on a day-to-day basis, as these are principally driven by the volume and mix of transactions and the time elapsed since the last clearing by card issuers/payment schemes, which is why these balances fluctuate from one reporting date to another.

Scheme debtor and merchant creditor balances are reflective of a snapshot in time at a period end. The balances and their relative movements can be determined by: i) the day of the week on which the period end falls. For example, if the period end falls on a weekend, when banks are closed in the US but open in the UAE, this causes an extra day delay (‘T+2/3’) in receipt of funds through the scheme settlement processes; ii) proportion of merchants who are not settled on a daily basis; iii) TPV in the last few days prior to the period end; and iv) currency mix of TPV and receipt of such funds through the scheme settlement processes.

11. Receivables and prepayments Receivables and prepayments are initially recognised at fair value in the period to which they relate. They are held at amortised cost, less provision (if any). Provisions are presented net with the related receivable on the consolidated statement of financial position.

2020 2019 USD’000 USD’000 Trade receivables 49,820 74,084 Chargeback receivables 2,048 2,191 Prepaid expenses 7,669 8,235 Advance taxes 5,717 4,096 Security deposits 1,562 1,154 Other receivables 7,052 3,783 73,868 93,543 Less: Provision for impairment (5,994) (5,047) 67,874 88,496

The movements in the provision for impairment are as follows:

2020 2019 USD’000 USD’000 As at 1 January 5,047 6,444 Charge during the year 2,183 510 Amounts written off (1,236) (1,805) Amounts reversed – (102) As at 31 December 5,994 5,047

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 193

Below is the change in working capital before settlement related balances:

2020 2019 2020 USD’000 USD’000 vs 2019 Trade receivables & chargeback receivables (Net of provisions for expected credit losses) 45,874 71,228 25,354 Prepayments and other receivables 22,000 17,268 (4,732) Trade and other payables (127,732) (127,453) 279 (59,858) (38,957) 20,901 Items excluded* Capital expenditure accrual (refer note 14) – – 3,595 Provisions for expected credit losses (refer above) – – (2,183) Other movements – – (2,732) Working capital before settlement related balances – – 19,581

* These items are excluded as they are either shown separately in the statement of cash flows or are non-cash in nature.

12. Cash and cash equivalents and restricted cash 12.1 Cash and cash equivalents Cash and cash equivalents include cash on hand, unrestricted balances held with banks and highly liquid financial assets with original maturities of less than three months, which are subject to an insignificant credit risk, and are used by the Group in the management of its short-term commitments. Cash and cash equivalents are carried at amortised cost in the consolidated statement of financial position.

2020 2019 USD’000 USD’000 Cash and cash equivalents 398,781 45,473

12.2 Restricted cash Restricted cash largely includes amounts payable for deferred settlements of transactions to merchants and other third parties that have been withheld in accordance with their contractual rights or otherwise remained unpaid not in ordinary course of business and are eventually payable on demand or as mutually agreed. The breakdown of restricted cash is as follows:

2020 2019 USD’000 USD’000 Settlement balances on-hold 51,689 53,245 Cash collaterals and collaterals against bank guarantees 861 784 52,550 54,029

13. Related party balances and transactions Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties include associates, parent, subsidiaries, and key management personnel or their close family members. The terms and conditions of these transactions have been mutually agreed between the Group and the related parties. Key management personnel consists of the Network Leadership Team. Management believes that the terms and conditions of these transactions are comparable with those that could be obtained from third parties.

Transguard Cash LLC Transactions for the year (refer to note 9) – there are no receivable / payable balances as at 31 December 2020 and 2019.

2020 2019 USD’000 USD’000 Directors’ remuneration Directors’ remuneration during the year * 1,577 2,363 End of service benefits (two Executive Directors) 44 31 Key management personnel remuneration ** Salaries and allowances 4,391 4,006 Terminal and other benefits 11,124 13,504

* Directors’ remuneration includes the cash component of Pre-IPO incentive. ** Key management personnel remuneration includes remuneration for two Executive Directors whose salaries are also included in Directors’ remuneration above.

Network International Holdings Plc Annual Report and Accounts 2020 194

Notes to the consolidated financial statements continued

13. Related party balances and transactions continued In 2020, Emirates NBD PJSC is not a related party as its shareholding has been reduced to less than 10%. Details of the related party transactions and balances for the year ended 31 December 2019 are as follows:

2019 USD’000 Emirates NBD PJSC Group Transactions for the year Revenue 60,714 Expenses 7,399 Net interest expense 1,981

Balances as at 31 December Receivable balances 18,603 Bank balance 73,873 Prepaid amounts included under: Long-term receivables 2,326 Receivables and prepayments 1,078 Overdraft facility (51,204) Performance and other guarantees (refer to note 30) 7,506

14. Trade and other payables 2020 2019 USD’000 USD’000 Accrued expenses 44,194 33,717 Staff benefits Current portion of share-based payment liability 9,403 7,224 Provision for bonus and sales incentives 2,236 11,539 Terminal and other benefits 3,590 819 Unpaid capital expenditure 19,428 23,023 Merchant deposits 4,934 5,448 Unclaimed balances 6,325 5,946 Tax and other related liabilities 14,327 15,123 Interest payable 3,683 1,918 Deferred income (refer to note below) 5,356 6,895 Other liabilities 14,256 15,801 127,732 127,453

Deferred income relates to the Group contractual liabilities for the project related revenues (refer to note 19 and note 2(f)).

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 195

15. Borrowings The Group’s total borrowings amounted to USD 434.5 million (2019: USD 377.4 million).

During the period, the Group refinanced the syndicated debt facility with a syndicate of 16 banks who have both a global and regional presence. The refinancing was conducted for the purposes of providing the Group with a larger facility and increased liquidity to fund growth accelerator projects, as well as for general corporate purposes. The new facility carries similar interest rates and the same financial covenants as the prior facility.

The facility is for USD 525 million and replaced the Group’s USD 350 million term financing facility, which had a drawn down balance of USD 289 million on 31 December 2019. The new facility consists of both AED and USD tranches of conventional financing and one USD tranche of Islamic financing facility. The facility carries a quarterly coupon rate of EIBOR plus margin on the AED conventional financing and LIBOR plus margin on the USD conventional financing and equivalent on the Islamic finance tranche. The margin is calculated by reference to the leverage (net debt / underlying EBITDA, as per definition and methodology provided in the financing documents), based on a grid which provides for reduced pricing as the leverage of the Group reduces and vice versa. The margin was initially set at 1.95% per annum applicable on the AED conventional financing and 2.20% per annum applicable on the USD conventional and Islamic financing tranches. Financial covenants limits are set to 3.5x net debt: underlying EBITDA. The facility has a tenor of six years. Principal repayments will commence in 2022.

The revolving credit facility was availed in November 2019, syndicated with three banks for general corporate funding purposes and carries an applicable interest period coupon rate of LIBOR plus a leverage linked margin, currently at 2.10% (2019: 1.85%). During the year, the Group has drawn an additional USD 40 million which was subsequently repaid. This has been classified as a current liability.

The table below provides a breakdown of the borrowings:

2020 2019 USD’000 USD’000 Term loan Principal outstanding 375,000 288,744 Unamortised debt issue cost (6,134) (7,814) Net amount included in borrowings 368,866 280,930 Revolving credit facility 35,000 35,000 Lease liability 925 1,619 Bank overdraft (for working capital) 29,681 59,895 Total 434,472 377,444

Split into: a) Term loan › Non-current portion (a) 368,866 210,930 › Current portion (b) – 70,000 Sub Total 368,866 280,930 b) Revolving credit facility › Current portion (b) 35,000 35,000 Sub Total 35,000 35,000 c) Lease liability › Non-current portion (a) 159 853 › Current portion (b) 766 766 Sub Total 925 1,619 Bank overdraft (for working capital) (b) 29,681 59,895 Total 434,472 377,444

As per consolidated statement of financial position Non-current borrowings (a) 369,025 211,783 Current borrowings (b) 65,447 165,661 Total 434,472 377,444

Network International Holdings Plc Annual Report and Accounts 2020 196

Notes to the consolidated financial statements continued

16. Discontinued operations and assets held for sale A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

› represents a separate major line of business or geographic area of operations; › is part of a single coordinated plan to dispose of a separate major line of business or geographic area of operations; or › is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale.

The key criteria for held for sale classification is the commitment from the appropriate level of management to sell the asset, and an active programme to locate a buyer and complete the plan within 12 months from the date of classification except for the extension period allowed under IFRS 5 as mentioned below.

When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is re-presented as if the operation had been discontinued from the start of the comparative year.

Assets and liabilities held for sale comprises assets and liabilities that are classified as held-for sale or distribution if it is highly probable that they will be recovered primarily through sale or distribution rather than through continuing use.

Immediately before classification as held for sale or held for distribution, the assets, or components of a disposal group, are remeasured in accordance with the Group’s other accounting policies.

Following are the components that the Group classified as discontinued operations in prior years. a) Acquiring operation with Ahli United Bank B.S.C. (‘AUB’) – the Group closed its Merchant Acquiring services in Bahrain (through AUB) in 2019 and therefore, does not have any assets or liabilities relating to this business in the Group’s consolidated statement of financial position as at 31 December 2019 and 31 December 2020. b) Mercury Payments Services LLC (‘Mercury’) – Mercury was classified as discontinued operation in the 2018 and 2019 Group financial statements as the Group’s Board made a strategic decision to divest the scheme operation of the Group. Management remains committed to the disposal of Mercury and is exploring various opportunities. However, the disposal process has been delayed due to the niche nature of the asset and disruption as a result of the pandemic. Therefore, the Group was not able to conclude the sale during the year and has accordingly classified Mercury as continuing operations and prior year figures have been reclassified in line with the criteria under IFRS 5.

Below are the profit or loss, cash flows and assets and liabilities position of the Group’s discontinued operations.

Loss from discontinued operations During the year, discontinued operation resulted in Nil loss (2019: USD (0.4) million relating to AUB).

Cash flows used in discontinued operations During the year, discontinued operation resulted in Nil cash (2019: USD (0.7) million relating to AUB).

Assets and liabilities held for sale As at the reporting date, discontinued operation resulted in Nil assets and liabilities held for sale (2019: Nil).

17. Other long-term liabilities 2020 2019 Notes USD’000 USD’000 Staff benefits 17.1 12,836 13,353 Lease liabilities for right of use assets 25.2 8,748 11,026 21,584 24,379

17.1 Staff benefits Employee end of service benefits (refer a) 12,836 10,870 Share-based compensation (refer b) – 2,483 12,836 13,353

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 197

a) Employee end of service benefits The Group’s employee end of service benefits include gratuity benefit scheme, defined contribution plans and UAE pension fund (on behalf of its UAE national employees), in line with laws of the local jurisdiction where the Group operates in (i.e. mainly UAE, Jordan and Africa).

Pensions are provided by way of a contribution to a personal pension scheme or cash allowance in lieu of pension benefits. End of Service Gratuity is provided to non-UAE nationals as a lump sum cash payment following the end of service, based on the length of service. The charge and the liability recognised for gratuity schemes are calculated through actuarial valuation carried out by the external qualified actuary valuer, using the Projected Unit Credit (‘PUC’) actuarial method. Under UAE law, there is no requirement to invest these contributions to any assets for the purpose of settling these obligations, and accordingly there are no associated plan assets.

The Group determines the net interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability taking into account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments.

Net interest expense and other expenses related to defined benefit plans are recognised in the consolidated statement of profit or loss. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, are recognised immediately in the consolidated statement of other comprehensive income.

The Group’s employee benefits obligation as at 31 December 2020, included in ‘employee end of service benefits’ above, amounted to USD 12.8 million (2019: USD 10.9 million). The details of the assumptions used and the sensitivity analysis are disclosed under note 2 (f) ‘Accounting judgements and estimates’. b) Share-based compensation The Group currently operates the following share-based compensation plans:

› Management Incentive Award Plan (‘MIP’) and IPO Cash Bonus › Long Term Incentive Plan (‘LTIP’)

MIP and IPO cash bonus are cash settled share-based payment plans, whereas LTIP is an equity-settled share-based payment.

Key features and accounting policy with respect to Group Incentive Plans are as below:

Cash-settled share-based payment The accounting treatment of cash-settled share-based payment plans are dependent upon fulfilment of any of the following conditions that determine whether the Group has received the services that entitle the employees to receive cash (or any other assets) of the entity, under a share-based payment arrangement:

› Service conditions › Performance conditions › Period of employment

In such incentive plans vesting conditions are either service conditions or performance conditions. Service conditions require the employee to complete a specified period of service. Performance conditions require the employee to complete a specified period of service and specified performance targets. Award payments vest when the associated vesting conditions are satisfied and the Group recognises the cost associated with such incentive plans in the consolidated statement of profit or loss.

The period over which cost needs to be recognised will commence from the grant date and will continue till such periods over which the employees render associated services or meet the conditions of the plan. The total liability of the grants vested at a reporting date is fair valued. Subsequently the fair value of the liability is re-measured at each reporting date and the date of settlement. Any change in fair value is recognised within the consolidated statement of profit or loss in that period, for any catch up element.

Network International Holdings Plc Annual Report and Accounts 2020 198

Notes to the consolidated financial statements continued

17. Other long-term liabilities continued Equity-settled share-based payment Equity-settled share-based payment transactions, in which the Group receives services as consideration for equity instruments of the parent entity (including shares or share options).

For equity-settled share-based payment transactions, the Group measures the services received, and the corresponding increase in equity, directly, at the fair value of the services received. If the fair value cannot be estimated reliably, the Group measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. For transactions with employees and others providing similar services, the Group measures the fair value of the equity instruments granted, because it is typically not possible to estimate reliably the fair value of employee services received. The fair value of the equity instruments granted is measured at grant date.

For services measured by reference to the fair value of the equity instruments granted, all non-vesting conditions are taken into account in the estimate of the fair value of the equity instruments.

However, vesting conditions that are not market conditions are not taken into account when estimating the fair value of the shares or options at the relevant measurement date. Instead, vesting conditions are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. Hence, on a cumulative basis, no amount is recognised for services received if the equity instruments granted do not vest because of failure to satisfy a vesting condition (other than a market condition).

The fair value of equity instruments granted should be based on market prices, if available, and to take into account the terms and conditions upon which those equity instruments were granted. In the absence of market prices, fair value is estimated, using a valuation technique to estimate what the price of those equity instruments would have been on the measurement date in an arm’s length transaction between knowledgeable, willing parties.

The Group has calculated the fair value of the equity instruments granted by applying well-established principles of financial analysis, adapted as appropriate to meet the requirements of valuing individual incentive plans. For the valuation of the plan with only non-market conditions, the Black-Scholes model has been used whereas, for the valuation of the incentive plan with market condition, the Monte-Carlo model has been used to compute the fair value of the equity instruments.

After the vesting date and a corresponding increase in equity, no subsequent adjustment to total equity shall be made. The Group will not subsequently reverse the amount recognised for services received from an employee if the vested equity instruments are later forfeited or, in the case of share options, the options are not exercised. However, a transfer within equity is allowed, i.e. a transfer from one component of equity to another.

Below are the key features of Group incentive plans:

Management Incentive Award Plan and IPO Cash Bonus Network International LLC, a subsidiary of the Group, operates the following incentive plans.

– Network International LLC Management Incentive Award Plan (‘MIP Plan’) MIP Plan is a pre-existing phantom share incentive cash settled plan. The MIP awards have been made to 33 members of the Group’s management, including the Chief Executive Officer. Each award entitles participants to receive a cash payment that is calculated by reference to the offering price of the Group at Admission as determined by the Remuneration Committee acting in good faith. The Network International LLC MIP acts as a retention tool in respect of the Group’s senior management participants as the continued vesting of the existing awards and payment in respect of the part of the existing awards which have vested are conditional upon the participant remaining employed within the Group.

– Network International LLC IPO Cash Bonus Network International LLC has awarded eight members of the Group’s management (Grantees), including the Chief Executive Officer, cash bonus awards (Cash Bonus Awards) subject to and conditional upon the listing. Grantees are entitled to receive a cash payment which is calculated by reference to the offering price of the Group at Admission as determined by the Remuneration Committee acting in good faith. The Cash Bonus Awards are subject to time vesting. 50% of the Cash Bonus Awards will vest on listing. One sixth of the Cash Bonus Awards will subsequently vest on each of the first two anniversaries of the listing and a one sixth of the Cash Bonus Awards will subsequently vest on the date which is 30 months after listing.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 199

The aggregate amount that has been allocated to the eligible employees for the MIP Plan and IPO Cash Bonus amounted to USD 33.2 million which will be paid to the employees in tranches. As at 31 December 2020, the Group has recorded a liability of USD 9.4 million (2019: USD 9.7 million) based on the net present value of the vesting condition and accordingly recognised a charge of USD 6.8 million (2019: 10.0 million) in the consolidated statement of profit or loss.

Long Term Incentive Plan (‘LTIP’) The Group has established a long-term equity-settled share-based incentive plan (Network International Holdings Long Term Incentive Plan ‘LTIP Plan’) which is awarded to the eligible employees and subject to the condition specified under the LTIP Plan rules through three grants.

The key features of grants 1 and 3 are as follows:

› Under the grants, the plan is rolled out to select eligible employees of the Group. › The awards under these grants will normally vest on the third anniversary of the date of grant, unless an event occurs before then which causes the award to vest under the rules of the LTIP Plan. › Multiple performance conditions apply to the award (including market and non-market), and the award may only vest to the extent that the performance conditions have been satisfied.

Under grant 2, the plan is rolled out to all the employees of the Group based on meeting some eligibility criteria, as an incentive in recognition of the efforts to support the listing of the Group. The award vesting is subject only to the participant’s continued employment with the Group.

Below are the details of three grants:

Contractual life Particulars Date of grant Grant date share price Vesting condition of options a) Adjusted EPS Grant 1 17 May 19 GBP 5.3 b) Revenue 3 years c) Relative TSR Grant 2 24 October 19 GBP 5.25 Service condition only 1.5 years 13 March 20 GBP 4.33 a) Adjusted EPS Grant 3 b) Revenue 3 years 19 August 20 GBP 4.08 c) Relative TSR

Details of number of shares to be vested under grants 1 and 3 for the achievement of performance conditions:

CAGR Awards vesting Adjusted EPS Revenue Relative TSR Weighting (50%) 25% 25% 0% less than 12% compound growth p.a. below median performance company achieves median positioning relative 25% 12% compound growth p.a. to the comparator Group company achieves upper quartile positioning 100% 16.5% compound growth p.a. relative to the comparator Group

Note: For all the elements of the award vesting is subject to a share price underpin of GBP 4.35 at the end of vesting period.

Detail of the valuation assumptions: Grant 3 Description Grant 1 Grant 2 13 March 2020 19 August 2020 Black-Scholes and Valuation model Black-Scholes Black-Scholes and Monte-Carlo model Monte-Carlo model Risk free interest rate 0.69% p.a. 0.51% p.a. 0.69% p.a. 0.006% p.a. Constituents of the FTSE TSR comparator group – Constituents of the FTSE 250 at the time of grant 250 at the time of grant 0% (assumed participants entitled to 3% assumed 0% (assumed participants entitled to dividends Dividend equivalent dividends or dividends dividend yield or dividends equivalents) equivalents)

Network International Holdings Plc Annual Report and Accounts 2020 200

Notes to the consolidated financial statements continued

17. Other long-term liabilities continued Long Term Incentive Plan (‘LTIP’) continued At the date of the awards granted, the Group has calculated the fair value of all the grants to recognise a charge amounting to USD 4.1 million (2019: 1.4 million) in the consolidated statement of profit or loss for the year ended 31 December 2020 with a corresponding increase in equity.

Below is the breakdown of all share-based compensation plans mentioned above under current and non-current liabilities.

Liability P&L charge USD’000 USD’000 31 December 31 December 31 December 31 December Scheme Settlement Conditions 2020 2019 2020 2019 MIP Plan and IPO Cash settled Vesting conditions Cash Bonus as per the scheme 9,403 9,707 6,800 9,994

Cumulative P&L charge P&L charge USD’000 USD’000 31 December 31 December 31 December 31 December Scheme Settlement Conditions 2020 2019 2020 2019 LTIP – Grant 1 ,2 Equity settled Service and / or and 3 performance conditions 5,475 1,405 4,070 1,405

Below is the current and non-current portion of the LTIP:

2020 2019 USD’000 USD’000 Non-current portion – 2,483 Current portion (included under note 14) 9,403 7,224 9,403 9,707

18. Share capital and reserves Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.

2020 2019 USD’000 USD’000 Issued and fully paid up 550,000,000 shares of GBP 0.10 each (2019: 500,000,000 shares of GBP 0.10 each) 71,557 65,100

On 31 July 2020, the Company issued additional share capital equivalent to 50 million shares. The shares were issued at a price of USD 5.3 per share (GBP: 4.1 per share; par value: GBP 0.10 each). Accordingly, the Company’s share capital has increased by USD 6.5 million and the Company has recognised share premium of USD 258.3 million, out of which an amount of USD 6.0 million has been set off in relation to the costs that are directly attributable to the issuance of additional share capital.

Reserves comprise the following:

Foreign exchange reserves amounted to USD (19.4) million (2019: USD (20.1) million), include the cumulative net change due to changes in value of subsidiaries’ functional currency to USD from the date of the previous reporting period to the date of the current reporting period.

Reorganisation reserves amounted to USD (1.5) billion (2019: USD (1.5) billion, include the reserve created as part of restructuring undertaken by the Group in 2019.

Other reserves include statutory reserve amounting to USD 7.5 million (2019: USD 7.3 million) and fair value reserve amounting to USD (2.7) million (2019: USD (1.4) million). Statutory reserve is the reserve representing a proportion of profit that is required to be maintained in subsidiary companies based on the local regulatory laws of the respective countries in which the Group operates.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 201

19. Revenue Merchant Solutions Under Merchant Solutions, the Group provides a broad range of technology-led payment solutions to its merchants through a full omnichannel service allowing them to accept payments of multiple types, across multiple payment channels. The Group offers functionality in most aspects of payment acceptance, whether in-store, online or on a mobile device, by providing access to a global payments network through its agile, integrated, secure, reliable and highly scalable technology platforms, Network One and Network Lite. The Group’s Merchant Solutions business comprises its direct acquiring businesses and acquirer processing services, whereby the Group provides processing for its financial institutions direct acquiring business. The Group generates both transactional and non-transactional revenue (refer below for detail) under Merchant Solutions.

Issuer Solutions Through its Issuer Solutions business line, the Group provides a range of innovative card products and services to its consumers. The Group provides its Issuer Solutions customers with a comprehensive proposition supporting all components of the card issuing value chain, including account hosting, transaction processing, settlement, reconciliation, chargebacks and other ancillary services. The Group provides its Issuer Solutions customers with the ability to open card accounts for consumers and issue and create a range of card products, including credit, debit, Islamic, pre-paid and digital/virtual cards. The Group also provides support for its Issuer Solutions customers to enable them to host and manage a large portfolio of card product solutions ranging from simple card usage to VIP card products, including highly configurable and personalised usage. The Group generates both transactional and non-transactional revenue (refer below for detail) under Issuer Solutions.

For both Merchant and Issuer Solutions, the Group’s sources of revenue can be broadly categorised into transaction based revenue and non-transaction based revenue.

› Transaction based revenue: includes revenue generated through a combination of: (a) a Gross Merchant Service Charge (‘MSC’), charged to the merchant on the total processed volume (‘TPV’); (b) a fee per transaction processed and billed; (c) a fee per card hosted and billed; and (d) fees for the provision of Value Added Services including foreign exchange services. The revenue is reported on a net basis, i.e. after the deduction of interchange and scheme fees paid to the card issuer and payment schemes, respectively. The transactional based revenue is recognised at a point in time in line with the Group accounting policy.

Interchange fees are the fees that are paid to the card issuing banks which are generally based on transaction value, but could also be a fixed fee combined with an ad valorem fee. Scheme fees are the fees paid to the payment schemes for using cards licensed under their brand names and for using their network for transaction authorisation and routing.

› Non-transaction based revenue: includes but is not limited to revenue generated through provision of various value-added services (those that are fixed periodic charge), rental from point-of-sale (‘POS’) terminals and project related revenue.

The non-transactional based revenue is recognised at a point in time or over time depending upon the type of service being provided, contractual terms and timing when the performing obligation is met by the Group, in line with the Group accounting policy.

The Group recognises the revenue over time mainly in the following cases:

› Project related revenue, where the Group provides services to develop or enhance the tangible / intangible assets which are short term in nature; and › Other services provided by the Group where customer simultaneously receives and consumes the benefits as and when the Group performs its obligation.

The breakdown of revenue is as follows:

2020 2019 USD’000 USD’000 Merchant Solutions 109,415 152,955 Issuer Solutions 165,011 177,572 Other revenue 10,418 4,852 284,844 335,379

Network International Holdings Plc Annual Report and Accounts 2020 202

Notes to the consolidated financial statements continued

20. Personnel expenses The Group’s personnel expenses include salaries, allowances, bonuses and terminal and other benefits recognised during the period, when the associated services are rendered by the employees. The details of personnel expenses are as follows:

2020 2019 USD’000 USD’000 Salaries and allowances 71,965 63,647 Bonus and sales incentives 3,787 11,498 Share-based compensation* 10,870 11,398 Terminal and other benefits** 10,311 10,201

96,933 96,744

Total number of employees 1,309 1,309

* Share-based compensation includes charge for management incentive award plan (‘MIP’) and IPO Cash Bonus, amounting to USD 6.8 million (2019: USD 10.0 million) and LTIP Plan charge amounting to USD 4.1 million (2019: USD 1.4 million). Refer to note 17 for details. ** Social security cost and pension cost amounted to USD 1.4 million (2019: USD 1.1 million) and USD 0.2 million (2019: USD 0.2 million) respectively.

21. Selling, operating and other expenses Selling, operating and other expenses consist primarily of technology and communication related expenses, processing service costs, legal and professional charges, provision for expected credit loss and other general and administrative expenses. The details of selling, operating and other expenses are as follows:

2020 2019 USD’000 USD’000 Technology and communication cost 44,288 42,358 Third-party cost 23,518 26,786 Legal and professional fees 22,102 24,762 Provision for expected credit losses 2,183 510 Other general and administrative expenses 11,083 12,008 103,174 106,424

21.1 Auditor remuneration The details of Group’s auditor remuneration are as follows:

2020 2019 USD’000 USD’000 Total fees to the Group’s auditor for the audit of the Group’s Annual Report and Accounts 786 779 Total fees to the Group’s auditor for other services: Review of half yearly financial information 159 113 Other non-audit services – IPO related – 902 Other non-audit services 46 38 991 1,832

22. Net interest expenses Interest expenses comprise interest expense on borrowings and lease liabilities. All borrowing costs are recognised in the consolidated statement of profit or loss using the effective interest method. Interest income comprises interest income on funds invested. Interest income is recognised in the consolidated statement of profit or loss, using the effective interest method. The breakdown of net interest expenses is as follows:

2020 2019 USD’000 USD’000 Interest on term loan facility 12,935 16,800 Interest on revolving credit facility 1,837 200 Interest on bank overdrafts 3,780 2,800 Amortisation of debt issuance cost 1,642 4,504 Other interest expense 1,916 1,833 Interest income (441) (1,293) 21,669 24,844

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 203

23. Earnings per share (‘EPS’) Basic earnings / (loss) per share amounts are calculated by dividing the profit / (loss) attributable to owners of the parent by the weighted average number of ordinary shares in issue during the financial period.

Diluted earnings / (loss) per share amounts are calculated by dividing the profit / (loss) attributable to owners of the parent by the weighted average number of ordinary shares in issue during the financial period adjusted for the effects of potentially dilutive options.

The basic and diluted earnings per share is based on earnings of USD 6.2 million (2019: USD 57.6 million), USD 6.2 million for continuing operations (2019: USD 57.9 million) and nil for discontinued operations (2019: USD (0.4) million).

During the year the Company issued 50.0 million new ordinary shares and earnings per share is computed on weighted average number of 520.8 million shares (2019: 500,000,000 million shares). For 2019, there was no change in the number of shares used in the calculation of weighted average number of shares in issue because the principles of reverse acquisition were applied in accordance with IAS 33, following the Group reorganisation in April 2019 prior to the Group’s listing on the London Stock Exchange. For details on the Group reorganisation, please refer to note 1.

There is no change in the basic and diluted (‘EPS’). The diluted earnings per share have been calculated after considering potential dilutive options for the Group’s scheme for employee share-based payments.

The profit attributable to the equity holders for the year ended 31 December 2020 is based on weighted average number of 520,833,333 shares (2019: 500,000,000 shares).

2020 2019 USD cents USD cents Earnings per share (basic and diluted) 1.2 11.5 Earnings per share – Continuing operations (basic and diluted) 1.2 11.6 Earnings per share – Discontinued operations (basic and diluted) – (0.072)

24. Taxes Taxes comprise current and deferred tax. Current tax and deferred tax is recognised in the consolidated statement of profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

Current tax Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or receivable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends. Goodwill is not deductible for tax purposes.

Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for:

› temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; › temporary differences related to investments in subsidiaries, associates and jointly controlled entities to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and › Taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

Network International Holdings Plc Annual Report and Accounts 2020 204

Notes to the consolidated financial statements continued

24. Taxes continued Deferred tax continued A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

24.1 Taxes The tax expense recognised in the consolidated statement of profit or loss is as follows:

2020 2019 USD’000 USD’000 Deferred tax expense / (benefit) 17 (725) Current tax expense 4,327 5,984 Adjustment for prior periods 360 1,379 Tax expenses 4,704 6,638

24.2 Deferred tax liability 2020 2019 USD’000 USD’000 Balance as at 1 January 1,788 2,324 Deferred tax expense / (benefit) 17 (725) Effects of change in foreign exchange 32 189 Balance as at 31 December 1,837 1,788

24.3 Reconciliation of effective tax 2020 2019 USD’000 USD’000 Profit before tax from continuing operations 10,302 63,955 Tax using the Company’s domestic tax rate* – – Effect of tax rates in foreign jurisdictions 6,649 8,617 Tax effect of: Non-deductible expenses 638 1,345 Tax-exempt income – (123) Other allowable deduction (608) (1,260) Tax incentives / rebates (2,266) (2,665) Carry forward losses (84) – Deferred tax expense / (benefit) 17 (725) Adjustment for prior periods 360 1,379 Other adjustments (2) 70 Income tax expense 4,704 6,638

* As the Group’s largest operations are in UAE, the tax rate applied in this tax reconciliation is that of UAE (i.e. Nil), rather than the rate applying in the UK where the Company is incorporated.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 205

24.4 Reconciliation of deferred tax Balance at Recognised Recognised Balance 1 Jan in P&L in OCI at 31 Dec 2020 Deferred tax asset Provisions and other items 1,294 (32) – 1,262 Deferred tax liability Property and equipment and intangibles (600) 15 – (585) Foreign exchange differences (2,482) – (32) (2,514)

Balance as at 31 December (1,788) (17) (32) (1,837)

2019 Deferred tax asset Provisions and other items 500 794 – 1,294 Deferred tax liability Property and equipment and intangibles (465) (135) – (600) Foreign exchange differences (2,359) 66 (189) (2,482)

Balance as at 31 December (2,324) 725 (189) (1,788)

25. Leases Overview The Group early adopted IFRS 16 in 2018 using the modified retrospective approach.

At inception of a contract, the Group assesses whether a contract is, or contains, a lease.

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

› The contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; › The Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; › The Group has the right to direct the use of the asset. The Group has this right when it has the decision making rights that are relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of the asset if either: – The Group has the right to operate the asset; or – The Group designed the asset in a way that predetermines how and for what purpose it will be used.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

Accounting policy for the lessee The Group recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right of use asset is subsequently depreciated using the straight line method from the commencement date to the earlier of the end of the useful life of the right of use asset or the end of the lease term. The estimated useful lives of the right of use assets are determined on the same basis as those of property and equipment. In addition, the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Network International Holdings Plc Annual Report and Accounts 2020 206

Notes to the consolidated financial statements continued

25. Leases continued Accounting policy for the lessee continued Lease payments included in the measurement of the lease liability comprise the following:

› Fixed payments, including in-substance fixed payments. › Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date. › Amounts expected to be payable under a residual value guarantee. › The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a charge in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right of use asset, or is recorded in the consolidated statement of profit or loss if the carrying amount of the right of use asset has been reduced to zero.

The Group presents right of use assets that do not meet the definition of investment property in ‘property, plant and equipment’ and lease liabilities in ‘other payables’ in the consolidated statement of financial position.

Short-term leases and leases of low-value assets The Group has elected to take exemption for certain lease contracts that have either a lease term of 12 months or are low-value. The Group recognises the lease payments associated with these leases as an expense on a straight line basis over the lease term.

The Group leases offices to carry out its operations in different locations. Information about leases for which the Group is a lessee is presented below:

25.1 Right of use assets 2020 2019 USD’000 USD’000 Balance as at 1 January 12,461 8,059 Additions during the year 1,227 6,563 Depreciation charge for the year (2,400) (3,004) Derecognition of right-of-use assets (984) – Effect of change in foreign exchange 126 843 Balance as at 31 December 10,430 12,461

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 207

25.2 Lease liabilities 2020 2019 USD’000 USD’000 Maturity analysis – contractual undiscounted cash flows Less than one year 3,871 3,976 One to five years 10,510 11,691 More than five years 3,184 5,092 Total undiscounted lease liabilities at 31 December 17,565 20,759

Current 2,301 2,048 Non-current (refer to note 17) 8,748 11,026 Discounted lease liabilities included in the statement of financial position at 31 December 11,049 13,074

25.3 Amounts recognised in the consolidated statement of profit or loss 2020 2019 USD’000 USD’000 Interest expense on lease liabilities 1,843 1,714 Depreciation of right of use assets 2,400 3,004

The expense relating to leases of low-value assets and short-term lease assets that are not a part of the above right of use assets and lease liabilities (as the Group has availed exemption of short-term lease and low-value assets under IFRS 16) amounted to USD 0.1 million (2019: USD 0.1 million).

Accounting policy for the lessor When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right of use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Group applies IFRS 15 to allocate the consideration in the contract.

The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term.

The Group leases out its point of sales (‘POS’) terminals. The Group has classified these leases as operating leases, because they do not transfer substantially all of the risks and rewards incidental to the ownership of the assets.

The rental income recognised by the Group as at 31 December 2020 was USD 6.4 million (2019: USD 6.2 million).

Network International Holdings Plc Annual Report and Accounts 2020 208

Notes to the consolidated financial statements continued

26. Reconciliation of movements of liabilities to cash flows arising from financing activities

Liabilities Equity Lease Term loan liability & revolving Share for right of ATM lease credit Retained capital & Non- use asset liability facility earnings premium controlling Total USD’000 USD’000 USD’000 USD’000 USD’000 interest USD’000 2020 Opening balance 13,074 1,619 315,930 (12,821) 65,100 – 382,902 Acquisition of loan – – 415,000 – – – 415,000 Repayment of loan – – (328,751) – – – (328,751) Payment of debt issuance cost – – (6,676) – – – (6,676) Issuance of new shares – – – – 258,736 – 258,736 Payment of lease liabilities (3,934) (686) – – – – (4,620) Purchase of treasury shares – – – (10,425) – – (10,425) Issuance of subsidiary’s capital to non-controlling interest – – – – – 1,965 1,965 Total changes from financing cash flows 9,140 933 395,503 (23,246) 323,836 1,965 708,131

The effect of changes in foreign exchange rates (177) – – – – – (177)

Liability related changes Recognition of lease liabilities under IFRS 16 1,227 – – – – – 1,227 Derecognition of lease liability (984) – – – – – (984) Amortisation of debt issuance cost – 1,642 – – – 1,642 Write-off of unamortised debt issuance cost – – 6,721 – – – 6,721 Interest expense 1,843 73 – – – – 1,916 Interest paid – (81) – – – – (81) Total liability related changes 2,086 (8) 8,363 – – – 10,441

Closing balance 11,049 925 403,866 (23,246) 323,836 1,965 718,395

Current portion 2,301 766 35,000 – – – – Non-current portion 8,748 159 368,866 – – – –

2019 Opening balance 8,102 2,271 324,247 – 1,565,980 – 1,900,600 Acquisition of loan – – 35,000 – – – 35,000 Repayment of loan – – (44,918) – – – (44,918) Payment of debt issuance cost – – (2,903) – – – (2,903) Capital reduction (1,500,880) – (1,500,880) Payment of lease liabilities (3,748) (646) – – – – (4,394) Purchase of treasury shares – – – (12,821) – – (12,821) Total changes from financing cash flows 4,354 1,625 311,426 (12,821) 65,100 – 369,684

The effect of changes in foreign exchange rates 443 – – – – – 443

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 209

Liabilities Equity Lease Term loan liability & revolving Share for right of ATM lease credit Retained capital & Non- use asset liability facility earnings premium controlling Total USD’000 USD’000 USD’000 USD’000 USD’000 interest USD’000 Liability related changes Recognition of lease liabilities under IFRS 16 6,563 – – – – – 6,563 Amortisation of debt issuance cost – – 4,504 – – – 4,504 Interest expense 1,714 114 – – – – 1,828 Interest paid – (120) – – – – (120) Total liability related changes 8,277 (6) 4,504 – – – 12,775

Closing balance 13,074 1,619 315,930 (12,821) 65,100 – 382,902

Current portion 2,048 766 105,000 – – – – Non-current portion 11,026 853 210,930 – – – –

27. Financial instruments Classification From 1 January 2018, the Group classifies its financial assets in the following measurement categories:

› those to be measured subsequently at fair value (either through OCI (‘FVTOCI’), or through profit or loss (‘FVTPL’); and › those to be measured at amortised cost.

The classification depends on the Group’s business model for managing the financial assets: whether the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the cash flows or whether contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Management determines the classification of its investment at initial recognition.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

› the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and › the contractual terms of the financial asset give rise to cash flows on specified date that are solely payments of principal and interest on the principal amount outstanding.

A debt instrument is measured at FVTOCI only if it meets both of the following conditions and is not designated as at FVTPL:

› the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and › the contractual terms of the financial asset give rise to cash flows on specified date that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to designate the instrument under the classification of FVTOCI with subsequent changes in fair value being recorded in other comprehensive income. This election is made on an investment-by-investment basis.

In addition, on initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

All other financial assets are classified as measured at FVTPL.

Network International Holdings Plc Annual Report and Accounts 2020 210

Notes to the consolidated financial statements continued

27. Financial instruments continued Recognition and measurement Receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument.

Financial assets at fair value through other comprehensive income (‘FVTOCI’) are carried at fair value. After initial measurement, the Group presents fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses in respect of equity investment securities designated as FVTOCI to the consolidated statement of profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established.

Reclassifications Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Group changes its business model for managing financial assets.

Derecognition of financial instruments The Group derecognises financial assets when the contractual right to the cash flows from the financial assets expires, or when it transfers the rights to receive the contractual cash flows on the financial assets in a transaction in which substantially all the risk and rewards of ownership of the financial assets are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

Offsetting financial instruments Financial assets and financial liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions.

Impairment During the year, the Group has applied the ECL model in accordance with IFRS 9 as disclosed in note 2 (f).

Fair value measurement principles Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.

When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. If there is no quoted price in an active market, then the Group uses valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

Fair value hierarchy The Group measures the fair value using the following fair value hierarchy that reflects the significance of inputs used in making these measurements.

Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 211

Level 3: Inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

Accounting classifications and fair values Carrying value Fair value Total As at 31 December 2020 Financial Financial carrying Total fair USD’000 assets liabilities value value Level 1 Level 2 Level 3 Financial assets measured at fair value Investment securities 246 – 246 246 – 246 –

Financial assets not measured at fair value Scheme debtors 165,436 – 165,436 165,436 – 165,436 – Receivables and prepayments 67,874 – 67,874 67,874 – 67,874 – Restricted cash 52,550 – 52,550 52,550 52,550 – – Cash and cash equivalents 398,781 – 398,781 398,781 398,781 – – Long-term receivables 2,617 – 2,617 2,617 – 2,617 – 687,258 – 687,258 687,258 451,331 235,927 –

Financial liabilities not measured at fair value Merchant creditors – 165,142 165,142 165,142 – 165,142 – Trade and other payables – 127,732 127,732 127,732 – 127,732 – Borrowings – Current – 65,447 65,447 65,447 – 65,447 – Other long-term liabilities – 21,584 21,584 21,584 – 21,584 – Borrowings – Non-current – 369,025 369,025 369,025 – 369,025 – – 748,930 748,930 748,930 – 748,930 –

Carrying value Fair value Total As at 31 December 2019 Financial Financial carrying Total fair USD’000 assets liabilities value value Level 1 Level 2 Level 3 Financial assets measured at fair value Investment securities 246 – 246 246 – 246 –

Financial assets not measured at fair value Scheme debtors 185,268 – 185,268 185,268 – 185,268 – Receivables and prepayments 88,496 – 88,496 88,496 – 88,496 – Restricted cash 54,029 – 54,029 54,029 54,029 – – Cash and cash equivalents 45,473 – 45,473 45,473 45,473 – – Long-term receivables 2,533 – 2,533 2,533 – 2,533 – 375,799 – 375,799 375,799 99,502 276,297 –

Financial liabilities not measured at fair value Merchant creditors – 167,167 167,167 167,167 – 167,167 – Trade and other payables – 127,453 127,453 127,453 – 127,453 – Borrowings – Current – 165,661 165,661 165,661 – 165,661 – Other long-term liabilities – 24,379 24,379 24,379 – 24,379 – Borrowings – Non-current – 211,783 211,783 211,783 – 211,783 – – 696,443 696,443 696,443 – 696,443 –

Network International Holdings Plc Annual Report and Accounts 2020 212

Notes to the consolidated financial statements continued

28. Risk management The Group has exposure to the following risks:

› Credit risk › Liquidity risk › Market risk › Operational risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s Enterprise Risk Management Framework.

The Group is committed to embedding a strong risk culture to support good governance and sound risk management practice. The Board and management play a key role in directing and influencing this by ensuring:

› that a risk based approach is used during key decision making; › consistent tone from the top and clear responsibilities for risk identification and challenge; › employees have risk management accountability and escalate issues on a timely basis; › our incentive structures promote a risk aware culture to effectively manage risk and remunerate employees accordingly; and › we adopt a culture of ‘learning from our mistakes’ to foster continuous improvement of processes and controls.

The importance of risk culture is reinforced in the Group’s policies and standards and the Code of Conduct, to which all employees receive annual training as part of the attestation process.

Our risk governance model operates on the three lines of defence concept which ensures effective risk management, risk oversight and assurance. The First Line of Defence comprises all employees engaged in revenue generating and customer facing areas of the Group including support functions. Employees are responsible for identifying the risks within their respective activities and for the effective management of those risks through the development of appropriate policies, standards and controls. Employees are accountable for performing their activities within stated risk appetites and risk tolerance limits established by the Second Line of Defence and for escalating and reporting risk events to the Second Line. The Second Line of Defence is responsible for translating the risk appetite and strategy approved by the Board into actionable risk limits, policies and programmes under which the First Line activities are to be performed. The Second Line is also responsible for monitoring the performance of the First Line against these limits, policies and programmes. The Third Line of Defence comprises the Group Internal Audit function (‘GIA’). They provide independent assurance to the Board and management over the effectiveness of governance, risk management and control.

There are a number of priority areas that are vital to establishing a robust and sustainable risk assessment system for the Group, key to which is the process that we have in place. Further detail on the seven step risk management reporting process is outlined below:

1. Risk Identification 2. Inherent Risk Assessment 3. Existing Controls 4. Residual Risk Assessment 5. Action Planning 6. Risk Monitoring and Reporting 7. Oversight

Credit risk Credit risk is a risk of financial loss to the Group if a customer or counterparty fails to meet its contractual obligations, and arises principally from the Group’s scheme debtors, receivables and cash and cash equivalents held with banks.

The Group’s principal exposure to credit risk for its Merchant Solutions business is the risk of chargebacks by card issuers and penalties from payment schemes where the merchant is unable to settle the sum due. The Group seeks to mitigate such risk in part by creating reserve balances for merchants with a higher risk profile. The Group is also subject to credit risk for the receivables due from the payment schemes for its acquiring business and to banks and financial institutions for its Issuer Solutions business.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 213

As part of the Group’s Issuer Solutions business, the Group provides card issuance, hosting, transaction processing and other Value Added Services to various financial institutions. Some of these financial institutions also rely on the Group’s principal membership with various payment schemes to issue credit and debit cards as affiliate banks of the Group which results in counterparty risk arising through possible non-payment of settlement funds. To mitigate this risk, wherever possible, the Group conducts transactions with reputed financial institutions only and seeks to hold reserve balances on a case by case basis as well.

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each counterparty. However, management also considers the factors that may influence the credit risk of its counterparties, including the default risk of the industry and the country in which counterparties operate.

A vast majority of the Group counterparties have been transacting with the Group for over four years. Management has established a process under which each new counterparty is analysed individually for credit worthiness before the Group’s standard payment and delivery terms and conditions are offered. The Group’s review includes external ratings, if they are available, and in some cases bank references.

The Group establishes an allowance for impairment that represents its expected credit losses in respect of receivables.

At 31 December, the maximum exposure to credit risk (net of provisions) by geographic region is as follows:

2020 2019 USD’000 USD’000 Middle East 615,849 307,748 Africa 55,527 53,395 671,376 361,143

The maximum exposure to credit risk (net of provisions) by type of counterparty is as follows:

2020 2019 USD’000 USD’000 Schemes 165,436 185,268 Banks 495,370 170,032 Others 10,570 5,843 671,376 361,143

2020 2019 USD’000 USD’000 Not credit impaired (0-180 days) 672,532 358,276 Credit impaired (181 days and above) 4,838 7,914 Less: Loss allowances (5,994) (5,047) 671,376 361,143

Exposure to credit risk is monitored on an ongoing basis. Cash is placed with good credit rating banks. Major bank ratings are as follows:

2020 Name of the bank USD’000 Rating Agency Emirates NBD PJSC 158,412 P-2 Moody’s Standard Chartered Bank 13,428 P-1 Moody’s Arab African International Bank 2,329 B Capital Intelligence Citibank N.A. 260,272 P-1 Moody’s

2019 Name of the bank USD’000 Rating Agency Emirates NBD PJSC 73,873 P-2 Moody’s Standard Chartered Bank 11,439 P-1 Moody’s Arab African International Bank 4,434 B Capital Intelligence

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Notes to the consolidated financial statements continued

28. Risk management continued Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by cash or other financial assets. The Group’s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s business and reputation. The Group maintains adequate working capital facilities for various Group entities with reputable banks in respective countries. A significant part of the Group’s short-term liquidity requirements arises out of its settlement requirements pertaining to its direct acquiring business, where it typically makes payments to settle with merchants in advance of receiving payment from the schemes for the payment amount incurred on the card. In particular, in the UAE, the Group generally receives payments from the card issuing banks and payment schemes one business day after it has remitted funds to the merchants and these receivables are recorded on its balance sheet as scheme debtors. Since the Group’s settlement amount with merchants is based on the total amount of the card transaction less merchant discount and settlement fees, its acquiring payment cycle can result in temporary, but significant, liquidity requirements for which it principally uses its revolving credit facility.

Exposure to liquidity risk The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted and include estimated interest payment and exclude the impact of netting agreements.

31 December 2020 Contractual cash flows Carrying 2 months 2-12 More than USD’000 amount Total or less months 1-2 years 2-5 years 5 years Merchant creditors 165,142 165,142 165,142 – – – – Trade and other payables 127,732 145,936 39,455 106,481 – – – Borrowings – Current 65,447 67,086 31,089 35,997 – – – Other long-term liabilities 21,584 26,530 – – 16,701 6,645 3,184 Borrowings – Non-current 369,025 412,709 – – 50,244 348,763 13,702

Total 748,930 817,403 235,686 142,478 66,945 355,408 16,886

31 December 2019 Contractual cash flows Carrying 2 months 2-12 More than USD’000 amount Total or less months 1-2 years 2-5 years 5 years Merchant creditors 167,167 167,167 167,167 – – – – Trade and other payables 127,453 129,381 48,473 80,908 – – – Borrowings – current 165,661 177,818 63,493 114,325 – – – Other long-term liabilities 24,379 39,961 – – 27,142 7,727 5,092 Borrowings – non-current 211,783 230,872 – – 230,872 – –

Total 696,443 745,199 279,133 195,233 258,014 7,727 5,092

Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

The Group’s exposure to market risk arises from:

› Equity price risk › Currency risk › Interest rate risk

Equity price risk Equity price risk arises from the change in fair value of equity investments. The Group’s investment in securities classified as investment in fair value through profit or loss is exposed to equity price risk. With the change of 100 basis point in the price, keeping other factors constant, the price of the securities would increase / (decrease) by USD 2,460 only.

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Interest rate risk The Group’s long-term indebtedness and revolving line of credit for acquiring settlement needs and other working capital requirements are held at a variable rate of interest. The interest rates for these credit facilities are based on a fixed margin plus a market rate of interest. Interest rate changes do not affect the market value of such debt but could impact the amount of the Group’s interest payments and accordingly the Group’s future earnings and cash flows.

At the reporting date, the interest profile of the Group’s interest bearing financial assets and liabilities are as follows:

2020 2019 USD’000 USD’000 Fixed rate instruments Financial assets 50 22 Financial liabilities 7,242 8,052

Variable rate instruments Financial assets 129 46,283 Financial liabilities 427,230 369,392

Currency risk The Group is exposed to foreign exchange rate risk as a result of its foreign operations as well as transactions in currencies other than AED which is the Group’s functional currency. A substantial portion of the Group’s revenue (95.4% of 2020 revenue and 96.2% of 2019 revenue) is either incurred in US dollars or currencies pegged to the US dollar, including the AED. The Group’s foreign operations are principally in Egypt, Nigeria, Jordan and South Africa whose functional currencies are the Egyptian Pound, Nigerian Naira, Jordanian Dinar and South African Rand respectively. Translation of foreign operations is recognised under ‘other comprehensive (loss) / income’, whereas the translation effect of transactions and balances in foreign currencies is reflected in the consolidated statement of profit or loss of the respective period. In addition, as part of the Group’s role as a Merchant Acquirer, it may settle with merchants in currencies other than those in which it receives funds from payment schemes. Although the Group settles such transactions using the spot market rates, it is subject to a certain degree of currency risk and it recognises any such gains or losses in the income statement.

USD AED EGP JOD Others Total At 31 December 2020 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 Total financial assets Scheme debtors 7,215 150,513 1,681 4,858 1,169 165,436 Receivables and prepayments 15,916 35,175 5,916 10,021 846 67,874 Restricted cash 44,207 – 323 – 8,020 52,550 Cash and cash equivalents 273,931 105,519 6,949 4,539 7,843 398,781 Long-term receivables – 2,496 10 111 – 2,617 Investment securities 246 – – – – 246 341,515 293,703 14,879 19,529 17,878 687,504

Total financial liabilities Merchant creditors 46,293 107,173 1,701 1,948 8,027 165,142 Trade and other payables 14,150 93,568 8,180 10,495 1,339 127,732 Borrowings – current 38,016 21,115 – 6,316 – 65,447 Other liabilities – 14,004 7,045 – 535 21,584 Borrowings – non-current 284,668 84,357 – – – 369,025

383,127 320,217 16,926 18,759 9,901 748,930 Net position (41,612) (26,514) (2,047) 770 7,977 (61,426)

Network International Holdings Plc Annual Report and Accounts 2020 216

Notes to the consolidated financial statements continued

28. Risk management continued Currency risk continued USD AED EGP JOD Others Total At 31 December 2019 USD’000 USD’000 USD’000 USD’000 USD’000 USD’000 Total financial assets Scheme debtors 15,529 157,205 2,631 9,903 – 185,268 Receivables and prepayments 18,357 55,025 6,932 7,068 1,114 88,496 Restricted cash 53,773 – 234 – 22 54,029 Cash and cash equivalents 9,224 20,422 6,379 1,782 7,666 45,473 Long-term receivables – 2,325 98 110 – 2,533 Investment securities 246 – – – – 246

97,129 234,977 16,274 18,863 8,802 376,045

Total financial liabilities Merchant creditors 57,480 105,175 1,583 127 2,802 167,167 Trade and other payables 11,907 93,862 8,307 9,135 4,242 127,453 Borrowings – current 68,258 90,971 – 6,432 – 165,661 Other liabilities 2,483 13,947 7,717 – 232 24,379 Borrowings – non-current 96,875 114,908 – – – 211,783

237,003 418,863 17,607 15,694 7,276 696,443 Net position (139,874) (183,886) (1,333) 3,169 1,526 (320,398)

Sensitivity analysis As USD is pegged with AED and JOD, the table below calculates the effect of a reasonably possible movement of the USD currency rate against the various currencies, with all other variables held constant, on the profit or loss (due to the fair value of currency sensitive monetary assets and liabilities).

Assumed change from year end exchange rates EGP 1% Others 1% 2020 – USD’000 + / (-) (20) 80 2019 – USD’000 +/ (-) (13) 15

Operational risk Operational risk is the risk of direct or indirect losses arising from a variety of incidents with the Group’s processes, personnel, technology and infrastructure, and from external factors other than credit, market and liquidity risks.

The Group has implemented an Operational Risk Management Policy which is aligned to the Enterprise Risk Management Framework to identify, assess, manage and monitor its operational risks across all business processes.

Operational risk management practices are embedded in the organisation risk culture through the application of the following operational risk management processes. These processes are guided (as deemed appropriate) by the seven step risk management reporting process outlined above in the risk management section.

› Risk Assessment (‘RA’) › Risk and Control Self-Assessment (‘RCSA’) › Key Risk Indicators (‘KRIs’) › Incident and Loss Management (‘ILM’)

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Capital management The Board of Directors monitors the Group’s performance in relation to its long-term business plan and its long-term profitability objectives.

There were no changes in the Group’s approach to capital management during the year. The Group has complied with all externally imposed capital requirements.

The Group’s key objectives on capital management are as follows:

› to comply with all the regulatory requirements in markets we operate in; › to maintain a strong capital base with optimum capital structure so as to maintain investor, creditor and market confidence; › to provide adequate funds to meet requirements of future growth; and › to optimise returns for shareholders.

The Board of Directors monitors both the demographic spread of shareholders, as well as the return on capital (the Group defines this as shareholders’ equity).

29. Group entities

Company name Registered address 2020

Direct subsidiaries of Network International Holdings PLC (the ultimate parent entity) Network International Holding 1 Limited Unit GV-00-03-01-BC-10-0, Level 1, Gate Village 100% Building 3, Dubai International Financial Centre, P O Box 9275, Dubai, United Arab Emirates Network International Holding 2 Limited Unit GV-00-03-01-BC-10-0, Level 1, Gate Village 100% Building 3, Dubai International Financial Centre, P O Box 9275, Dubai, United Arab Emirates

Indirect subsidiaries of the ultimate parent entity Network International LLC * Level: 101-201 – Emirates NBD – AL Barsha (2), 49% P O Box 4487, Dubai UAE Mercury Payments Services LLC Level: 101-201 – Emirates NBD – AL Barsha (2), 70% P O Box 4487, Dubai UAE Diners Club (UAE) LLC Level: 101-201 – Emirates NBD – AL Barsha (2), 100% P O Box 4487, Dubai UAE Network International Investment Pte. Ltd. 112, Robinson Road, # 05-01, Singapore 068902 100% Network International Investment Holding Limited Les Cascades, Edith Cavell Street, Port-Louis, Mauritius 100% Network International Services (Mauritius) Limited Les Cascades, Edith Cavell Street, Port-Louis, Mauritius 100% Network International Payments Services Nigeria Limited 11th Floor, Heritage Place, 21 Lugard Avenue, Ikoyi, 100% Lagos, Nigeria Network International Payment Services Proprietary Limited Black River Park, North Park Block B, 2nd Floor, Office 1 100% & 2, 2 Fir Street, Observatory, 7925, South Africa Network International Services Limited Jordan Abdul Raheem Al-Wakeed St Building No. 43 Shmeisani 100% Amman, Jordan Network International Payment Services (S.A.E.) Building 13C01, Southern Business Park C, Cairo Festival 99.9% City, Cairo, Egypt. 92, Tahrir Street, Dokki, Giza Network International Egypt Company (S.A.E.) Building 13C01, Southern Business Park C, Cairo Festival 98% City, Cairo, Egypt. 92, Tahrir Street, Dokki, Giza Egyptian Smart Cards Company Building 13C01, Southern Business Park C, Cairo Festival 99.9% City, Cairo, Egypt. 92, Tahrir Street, Dokki, Giza Diners Club Services Egypt (S.A.E.) 55 Kods Sharif Street, Mohandessin, Giza, Egypt 98% Network International Arabia Limited Building Number: 3074, Prince Mohammed Bin 100% Abdulaziz Road, Level 29, Tower B, Olaya Towers, P O Box: 15870, Postal Code: 11454, Riyadh, Saudi Arabia NI Payment Services (Ghana) Ltd. GL-144-8556, Number 7, Airport road, Airport 100% Liberation Rd ACCRA La Dade-Kotopon Greater ACCRA P O Box CT 6217, Cantonments-ACCRA Ghana

Associate of Network International LLC Transguard Cash LLC B Wing, 1st Floor, Dubai Airport Free Zone 50%

* 51% shareholding of Network International LLC is owned by Leaf Holding Limited (a company registered under Dubai International Financial Centre, Dubai) which is a local sponsor as per the requirements of UAE laws.

Network International Holdings Plc Annual Report and Accounts 2020 218

Notes to the consolidated financial statements continued

30. Contingencies and commitments 2020 2019 USD’000 USD’000 Performance and other guarantees 13,358 8,399 Commitments 6,384 3,155 19,742 11,554

Performance and other guarantees includes guarantees given by the banks on Group’s behalf to the clients for performance and other obligations as per relevant contracts.

Commitments includes capital expenditure commitments against what the Group has committed with different vendors to procure the assets but has not yet acquired them.

31. Subsequent events Except for the below, there was no subsequent event identified until the date of the issuance of these consolidated financial statements.

On 27 September 2020, the UAE issued Federal Decree-Law No. (26) of 2020 (‘New Decree’) amending certain provisions of Federal Law No. (2) of 2015 on Commercial Companies. The New Decree came into force partially on 2 January 2021, and repealed the existing Foreign Direct Investment law. Once fully enacted on 27 March 2021, the foreign ownership restrictions will be abolished, allowing foreign investors to hold 100% of the share capital of their onshore companies in UAE, subject to exceptions for certain strategic commercial activities / sectors.

The above change is relevant to the Group’s existing structure in relation to one of the Group entities in UAE, i.e. Network International LLC which is 51% owned by Leaf Holding Limited (a company registered under Dubai International Financial Centre, Dubai) which is a local sponsor. The Group will evaluate the impact of the above change on the Group’s financial statements once the New Decree is fully enacted.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 219

Network International Holdings PLC Statement of Financial Position as at 31 December

2020 2019 Note USD’000 USD’000 Assets Non-current assets Investment in subsidiaries 6 1,553,158 1,553,158

Total non-current assets 1,553,158 1,553,158

Current assets Other receivables 303 147 Cash and cash equivalents 259,913 –

Total current assets 260,216 147

Total assets 1,813,374 1,553,305

Liabilities and shareholders’ equity

Liabilities Current liabilities Due to a related party 7 26,433 5,486 Other payables 7,228 2,042

Total current liabilities 33,661 7,528

Total liabilities 33,661 7,528

Shareholders’ equity Share capital 8 71,557 65,100 Share premium 252,279 – Retained earnings 1,455,877 1,480,677

Total shareholders’ equity 1,779,713 1,545,777

Total liabilities and shareholders’ equity 1,813,374 1,553,305

The notes on pages 221 to 225 form part of these financial statements. These financial statements were approved and authorised for issue by the Board of Directors on 7 March 2021 and signed on its behalf by:

Nandan Mer Director and Chief Executive Officer

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Network International Holdings PLC Statement of Changes in Equity For the year ended 31 December

Total Share Retained shareholders’ Share capital premium earnings equity USD’000 USD’000 USD’000 USD’000 As at 1 January 2020 65,100 – 1,480,677 1,545,777

Total comprehensive loss for the year – – (18,445) (18,445) Purchase of treasury shares – – (10,425) (10,425) Share-based payment – – 4,070 4,070 Issuance of new shares 6,457 258,280 – 264,737 Share issuance cost – (6,001) – (6,001)

As at 31 December 2020 71,557 252,279 1,455,877 1,779,713

Total Share Retained shareholders’ Share capital premium earnings equity USD’000 USD’000 USD’000 USD’000 As at 27 February 2019 65,100 – 1,500,880 1,565,980

Total comprehensive loss for the period – – (8,787) (8,787) Purchase of treasury shares – – (12,821) (12,821) Share-based payment – – 1,405 1,405

As at 31 December 2019 65,100 – 1,480,677 1,545,777

The notes on pages 221 to 225 form part of these financial statements.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 221

Notes to the Financial Statements

1. Basis of preparation Network International Holdings PLC (the ‘Company’) was incorporated on 27 February 2019. The Company was incorporated as part of a reorganisation to facilitate the listing of Network International Group (Network International Holdings PLC and its subsidiaries ‘the Group’) on the London Stock Exchange. The Company’s accounts are prepared based on FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland.

These financial statements were prepared in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland (‘FRS 102’). No profit and loss account is presented for the Company as permitted by section 408 of the Companies Act 2006. The net loss after tax for the Company was USD 18.4 million (2019: USD 8.8 million) for the year ended 31 December 2020.

As permitted by FRS 102, the Company has taken advantage of the disclosure exemptions available under that standard in relation to financial instruments, capital management, and presentation of a cash flow statement, standards not yet effective and related party transactions. Where relevant, equivalent disclosures have been given in the consolidated financial statements of Network International Holdings PLC, which the Company is consolidated in. We expect to continue to take advantage of this disclosure exemption for the foreseeable future. The financial statements have been prepared on the historical cost basis, except for financial instruments which are measured at fair value.

The Company listed its shares on the London Stock Exchange on 12 April 2019.

The principal steps of the Group reorganisation were as follows:

› On 27 February 2019, the Company was incorporated by Network International LLC for 100 ordinary shares of GBP 1 each. › On 20 March 2019, Network International LLC transferred investment in Network International Holdings PLC to the shareholders. › On 29 March 2019, the existing share capital of the Company comprising 100 shares of GBP 1 each was split 10:1 into 1,000 shares of GBP 0.10 each. Subsequently, on the same day, the Company issued 1,396 new shares of GBP 0.10 each for GBP 139 / USD 180. This was followed by a share consolidation resulting in total share capital comprising 100 shares of GBP 2.396 / USD 3.119592 each. The net effect of this restructuring of capital was to increase the nominal value per share to GBP 2.396 / USD 3.119592 for 100 shares outstanding. › On 29 March 2019, the Company issued 499,999,900 shares to existing shareholders (254,999,949 to Emirates NBD PJSC and 244,999,951 to WP / GA) of par value GBP 2.396 / USD 3.119592 per share in exchange for acquiring the shares of the subsidiary (Network International Holding 1 Limited) and the shareholders’ receivables from Network International Holding 1 Limited. This resulted in the creation of share capital of USD 1,559,795,688 and share premium of USD 6,183,530 (being the difference between the carrying value of the shareholders’ receivable of USD 13,614,704 and the corresponding nominal value of shares issued of USD 7,431,174). › On 1 April 2019, the Company undertook a capital reduction by reducing the nominal value of its shares in issue from GBP 2.396 / USD 3.119592 to GBP 0.1000 per share / USD 0.1302 and cancellation of share premium created above.

2. Functional and presentation currency The Company’s functional currency is British Pound (‘GBP’). The Company’s financial statements have been presented in United States Dollar (‘USD’) to align with the Group presentation currency. All financial information presented in USD has been rounded to the nearest thousands, except when otherwise indicated.

3. Going concern The Company acts as the ultimate holding company of Network International Group (the ‘Group’). The Group has made a profit of USD 5.6 million (2019: USD 57.0 million) with cash inflow from operating activities of USD 107.5 million (2019: USD 132.4 million) for the year and has a net asset position of USD 498.0 million as at 31 December 2020 (2019: 238.7 million). Furthermore, the Group meets its day-to-day working capital and financing requirements through its cash generated from operations and its banking facilities.

Network International Holdings Plc Annual Report and Accounts 2020 222

Notes to the financial statements continued

3. Going concern continued The Directors have adopted the going concern basis after assessing the principal risks and having considered the impact of COVID-19 on Group financial performance including under a base case and a severe but plausible downside scenario. The base forecast has been further stress tested by using a severe but plausible downside scenario, to assess the Group’s resilience against the possible adverse effect of the continued impact of the COVID-19 pandemic on the economy.

The Directors have, based on the assessment, the Group’s and the Company’s future business plan and other due considerations, a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of 12 months from the date of approval of these financial statements. Accordingly, the financial statements have been prepared on a going concern basis.

4. Significant accounting policies a. Investment in subsidiaries Investments in subsidiaries are accounted for at cost less, where appropriate, provisions for impairment. Given the impact of COVID-19 on the Group’s financial performance, management has considered whether there are any impairment indicators. Based on the management assessment, including sufficient liquidity and positive net current asset position of the Company and the Group and the temporary impact of COVID-19, management concludes that there are no such impairment indicators. b. Dividends Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established. Dividends payable to the Company’s shareholders are recognised as a liability and deducted from shareholders’ equity in the period in which the shareholders’ right to receive payment is established. c. Financial instruments Non-derivative financial instruments comprise other receivables and other payables due to a related party. i. Recognition and initial measurement All financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.

A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit & loss (‘FVTPL’), transaction costs that are directly attributable to its acquisition or issue. ii. Classification and subsequent measurement Financial assets On initial recognition, a financial asset is classified as measured at: amortised cost; fair value through OCI (‘FVOCI’) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

› it is held within a business model whose objective is to hold assets to collect contractual cash flows; and › its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

As of 31 December 2020, the Company’s financial assets include other receivables and cash and cash equivalents. All these financial assets are measured at amortised cost.

Financial liabilities Financial liabilities are classified as measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

As of 31 December 2020, the Company’s financial liabilities include other payables and due to a related party. All these financial liabilities are measured at amortised cost.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 223

iii. Derecognition of financial instruments Financial assets The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

In cases where the Company enters into transactions whereby it transfers assets recognised in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.

Financial liabilities The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss. d. Share-based compensation The Company currently operates the following share-based compensation plans for its Group entity employees:

› Long Term Incentive Plan (‘LTIP’)

The LTIP is an equity-settled share-based payment. The Company’s accounting policy with respect to this incentive plan is as follows:

Equity-settled share-based payment Equity-settled share-based payment transactions, in which the Company receives services as consideration for equity instruments of the parent entity (including shares or share options).

For equity-settled share-based payment transactions, the Company measures the services received, and the corresponding increase in equity, directly, at the fair value of the services received. If the fair value cannot be estimated reliably, the Company measures their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. For transactions with employees and others providing similar services, the Company measures the fair value of the equity instruments granted, because it is typically not possible to estimate reliably the fair value of employee services received. The fair value of the equity instruments granted is measured at grant date.

For services measured by reference to the fair value of the equity instruments granted, all non-vesting conditions are taken into account in the estimate of the fair value of the equity instruments. However, vesting conditions that are not market conditions are not taken into account when estimating the fair value of the shares or options at the relevant measurement date. Instead, vesting conditions are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. Hence, on a cumulative basis, no amount is recognised for services received if the equity instruments granted do not vest because of failure to satisfy a vesting condition (other than a market condition).

The fair value of equity instruments granted should be based on market prices, if available, and take into account the terms and conditions upon which those equity instruments were granted. In the absence of market prices, fair value is estimated, using a valuation technique to estimate what the price of those equity instruments would have been on the measurement date in an arm’s length transaction between knowledgeable, willing parties.

The Company has calculated the fair value of the equity instruments granted by applying well-established principles of financial analysis, adapted as appropriate to meet the requirements of valuing individual incentive plans. For the valuation of the plan with only non-market conditions, the Black-Scholes model has been used, whereas, for the valuation of the incentive plan with market conditions, the Monte-Carlo model has been used to compute the fair value of the equity instruments.

After vesting date and a corresponding increase in equity, no subsequent adjustment to total equity shall be made. The Company will not subsequently reverse the amount recognised for services received from an employee if the vested equity instruments are later forfeited or, in the case of share options, the options are not exercised. However, a transfer within equity is allowed, i.e. a transfer from one component of equity to another.

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Notes to the financial statements continued

5. Critical accounting estimates and judgements The preparation of financial statements requires Directors to make judgements and estimates that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. During the year, management has not applied any accounting estimates and judgements that are critical for the preparation of the Company’s financial statements.

6. Investment in subsidiaries 2020 2019 USD’000 USD’000 Investment in Network International Holding 1 Limited 1,553,158 1,553,158 Investment in Network International Holding 2 Limited* – – 1,553,158 1,553,158

* As at 31 December 2020, the investments in Network International Holding 1 Limited (as above) and Network International Holding 2 Limited (USD 100) comprises 100% of their ordinary share capital.

The Directors have assessed whether the Company‘s fixed asset investments require impairment. In making this assessment, the relationship between the Company’s market capitalisation and the carrying value of its investments has been considered, in addition to the disruption attributable to the COVID-19 pandemic and the effect of this on future trading. The assessment did not result in any impairment in 2020 (2019: Nil).

7. Due to a related party Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties include associates, parent, subsidiaries, and key management personnel or their close family members. The terms and conditions of these transactions have been mutually agreed between the Group and the related parties. Key management personnel consists of the Network Leadership Team.

2020 2019 USD’000 USD’000 Network International LLC 26,433 5,486

8. Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity.

2020 2019 USD’000 USD’000 Issued and fully paid up 550,000,000 shares of GBP 0.10 each (2019: 500,000,000 shares of GBP 0.10 each) 71,557 65,100

On 31 July 2020, the Company has issued additional share capital equivalent to 50 million shares. The shares were issued at a price of USD 5.3 per share (GBP: 4.1 per share; par value: GBP 0.10 each). Accordingly, the Company’s share capital has increased by USD 6.5 million and the Company has recognised share premium of USD 258.3 million, out of which an amount of USD 6.0 million has been set off in relation to the costs that are directly attributable to the issuance of additional share capital.

Network International Holdings Plc Annual Report and Accounts 2020 Strategic report Corporate governance Financial statements 225

9. Share-based compensation The Company has established a long-term equity-settled share-based incentive plan (Network International Holdings Long Term Incentive Plan ‘LTIP Plan’) which is awarded to the eligible employees and subject to the condition specified under the LTIP Plan rules through three grants.

The key features of grants 1 and 3 are as follows:

Below are the details of both grants:

Grant date Contractual life Particulars Date of grant share price Vesting condition of options a) Adjusted EPS Grant 1 17 May 19 GBP 5.3 b) Revenue 3 years c) Relative TSR Grant 2 24 Oct 19 GBP 5.25 Service condition only 1.5 years 13 March 20 GBP 4.33 a) Adjusted EPS Grant 3 b) Revenue 3 years 19 August 20 GBP 4.08 c) Relative TSR

Details of number of shares to be vested under grants 1 and 3 for the achievement of performance conditions:

CAGR Relative TSR Awards vesting Adjusted EPS Revenue Weighting (50%) 25% 25% 0% less than 12% compound growth p.a. below median performance company achieves median positioning relative to the 25% 12% compound growth p.a. comparator Group company achieves upper quartile positioning relative 100% 16.5% compound growth p.a. to the comparator Group

Note: For all the elements of the award vesting is subject to a share price underpin of GBP 4.35 at the end of vesting period.

Detail of the valuation assumptions:

Grant 3 Description Grant 1 Grant 2 13 March 2020 19 August 2020 Black-Scholes and Valuation model Black-Scholes Black-Scholes and Monte-Carlo model Monte-Carlo model Risk free interest rate 0.69% p.a. 0.51% p.a. 0.69% p.a. 0.006% p.a. Constituents of the TSR comparator group FTSE 250 at the time – Constituents of the FTSE 250 at the time of grant of grant 0% (assumed participants entitled to 3% assumed dividend 0% (assumed participants entitled to dividends Dividend equivalent dividends or dividends yield or dividends equivalents) equivalents)

At the date of the awards granted, the Company has calculated the fair value of all the grants to recognise a charge amounting to USD 4.1 million (2019: USD 1.4 million) in the statement of profit or loss for the year ended 31 December 2020 with a corresponding increase in equity.

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Contact Information

Registered Office Investor Relations Auditors Suite 1, [email protected] KPMG LLP 3rd Floor, 15 Canada Square, 11-12 St James’s Square, Company Secretary London E14 5GL London SW1Y 4LB [email protected] United Kingdom United Kingdom

Head Office Corporate brokers Registrars Network International Citigroup Global Markets Limited Link Group Level 1, Network Building, Citigroup Centre, 10th Floor, Al Barsha 2, Dubai, 33 Canada Square, Central Square, United Arab Emirates. Canary Wharf, 29 Wellington Street, Tel: +971 4 3032431 London E14 5LB Leeds LS1 4DL Fax: +971 4 3495377 United Kingdom United Kingdom

Registered number J.P. Morgan Securities plc 11849292 25 Bank St, Canary Wharf, London E14 5JP United Kingdom

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